Bonds

As investors await the 'great rotation' into equities, Aviva Investors' head of multi-asset retail funds, Peter Fitzgerald, takes a look at what to expect from portfolios if bond markets were to sell off.

The UK is two years behind the US in terms of economic recovery, a leading fund manager has warned.

FIXED INCOME

M&G's Stefan Isaacs has pointed to the "surprisingly dovish" statement from ECB president Mario Draghi as a sign the bank may introduce fiscal stimulus sooner than the market expects.

Bill Gross' $268bn PIMCO Total Return bond fund saw record outflows of almost $10bn in June as investors' flight from fixed income continued in earnest, according to reports.

The recent sell off in the bond market and growing liquidity issues have forced bond investors to use similar hedging techniques, undermining their effectiveness and causing concerns about how much downside protection funds really have.

The heavy sell-off in the US treasury market over the past two months could force the Fed to postpone its plans to begin reducing its asset purchase programme, according to Henderson's John Pattullo.

THE BIQ QUESTION

Leading strategic bond fund managers have cut their aggressive shorts on US treasuries, on the expectation the Federal Reserve may postpone plans to scale down QE if growth and inflation continue to undershoot.

Insight Investment has launched a UCITS version of its Short-Dated High Yield Bond fund, managed by Ulrich Gerhard.