Another year of pain for the bond bears in 2015?

Another year of pain for the bond bears in 2015?

Bill Harer and Michael Count, managers of the CF Canlife Corporate Bond fund, assess which fixed income strategies could catch out investors again next year.

A useful concept from time to time is the so-called ‘pain trade’. It is the idea the market will often move in the direction that causes the most pain to participants. The justification for taking such a masochistic view is it tells us something about positioning. For example, if the majority of investors think the bond market is going down, and have sold bonds to take themselves underweight, then the pain trade will be for the market to go up. If the market does go up, they are likely to move to cut positions in order to limit losses, in this case by buying back some of what they ...