Snowden backing fixed interest against rate rises

Old Mutual corporate bond manager Stephen Snowden believes fixed interest investment can make money ...

Old Mutual corporate bond manager Stephen Snowden believes fixed interest investment can make money in a rising interest rate environment. Snowden argued the bad news associated with a rising rate environment tends to be priced in on the first increase, with subsequent hikes in the base rate having little impact on asset prices. He said: "On 5 November 2003, rates started to rise and since then the gilt market has returned more than 6%." Snowden cited evidence from BNP Paribas that suggests rising rates are actually a positive for corporate bond spreads. The research, covering the period...