Bonds

Flexible investment mandate

Pockets of value emerging

Staff blog addresses growing concerns

Conventional bond funds will struggle to replicate returns seen in the past

Investors urged not to panic ahead of rate hikes

Investors cannot afford to ignore the increasingly positive correlation between core government bonds and credit markets as rate rises loom, says Jon Jonsson, senior portfolio manager, global fixed income at Neuberger Berman.

Fixed income managers have expressed concerns over a new initiative to boost shrinking liquidity in bond markets, fearing the inclusion of 15 banks will cause price swings in the market.

M&G has seen £3.4bn retail net outflows in the first six months of the year and has warned profits are expected to be "dampened" for the rest of the year as investors continue to shun fixed income funds.

Lombard Odier Investment Managers is preparing to launch a catastrophe bond fund, making UCITS version of the vehicle available to retail investors in the autumn.

A new industry initiative aiming to improve liquidity in the fixed income market has gone live under the title Neptune, supported by 42 banks and investment firms.