Managers should not be following a specific bond index

ON BONDS

Glendevon King's Yannick Naud says just a small exposure to stressed European countries could impact fund performance.

It is now a well-known fact correlation within equity markets across Europe is at a very high level. It is not the case in the European credit market as we experienced significantly large dislocations during 2010 depending on each asset type, subordination, rating and geographic location. It is therefore more important for a bond manager to make strategic choices instead of following any specific bond index. As a portfolio manager today, you might not want to be locked into 10-year UK gilts yielding less than 3.5% when most of the large central banks are conducting policies that co...