Falling market forcing managers to take bets

A stagnant bond market is increasingly forcing managers to use directional fixed interest investing ...

A stagnant bond market is increasingly forcing managers to use directional fixed interest investing to achieve a return. Colin Harte, manager of the Baring Directional Bond fund, says that in the current market, it is difficult to see how a manager can make a positive return without taking bets on interest and credit default rates through derivative instruments, which are gaining in popularity through Ucits III rules. "Directional bond investing offers a key advantage in falling bond markets," he says. "Unlike conventional managers a directional manager can actually go short when the rate...