Super-size me: The risk of going too big in bonds

Super-size me: The risk of going too big in bonds

Jim Cielinski, global head of fixed income at Threadneedle Investments, and Colin Lundgren, head of US fixed income at Columbia Management, explain why the risks of going big and being wrong in fixed income have never felt greater.

The fallout in fixed income markets following the departure of Bill Gross from mega-manager PIMCO has added a new dimension to the challenges facing fixed income investors. The bond market’s concerns of the last few weeks are noteworthy, and mostly justified, but should also be viewed as an opportunity to reflect on portfolio strategy, liquidity risk and firm risk. Fixed income investors face some big challenges currently – low and potentially rising interest rates, poor liquidity, and now, this shake-up at the top of the asset management world. The result has been increased uncertain...