Investors are flocking to safe haven UK government bonds as they seek shelter from turbulent global markets.
The price of 30-year gilts soared as much as 1.8% this morning, before retreating to 1.3% at 11am, with investors looking to shield their capital from the volatile market conditions.
F&C's Ian Robinson, who runs the group's £33m Corporate Bond fund, said he expects investors to flock into 30-year gilts as the area has underperformed over the past month.
He said 10-year gilts have proved popular over the past couple of weeks as investors ran for cover, so valuations of 30-year gilts have become more appealling.
He added he expects more money to flow into US treasuries, with 10- and 30-year yields hitting year lows during trading yesterday.
"I am not surprised investors have been buying into 10- and 30-year gilts as they are an obvious slide to safety and have underperformed over the past month," said Robinson.
"Investors will increasingly look to treasuries as they have less headwinds facing them than the UK - as gilts are reliant more on the eurozone than the US is."
Fidelity's Ian Spreadbury, manager of the group's £667m Strategic Bond fund, has adopted a defensive stance and diversified his gilt exposure.
"I have been taking steps to insulate my funds from the volatile environment," said Spreadbury.
"The first line of defence is ensuring the portfolios are well diversified and not over-concentrated in areas sensitive to the economic cycle, like banks and the consumer sector.
"I have even diversified my gilt exposure just in case investors begin to worry about the UK's fiscal position again."
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