Three-quarters (74%) of UK asset owners intend to take advantage of fixed income opportunities while they still can over the coming year, according to a new study from Capital Group.
Bond yields have been pushed up to their highest levels in almost a decade, but the widely-anticipated interest rate hikes from central banks later this year could drag them down to more modest levels.
As such, most UK asset owners are scrambling to lock into yields at historic highs, with half (51%) extending the duration of their existing bond portfolios.
Ed Harrold, fixed income investment director at Capital Group, said: “As monetary policy inflection nears, high quality bonds are becoming increasingly attractive.
“With yields near decade highs, UK bond investors have a rare opportunity to strengthen their defensive allocations and secure attractive yields.”
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Investors are also taking more risk in the bonds they are buying, with 28% increasing credit risk over the coming year. A lesser 15% plan to be more risk-averse in their fixed income buying.
A unifying consensus among bond buyers was that active strategies offered the best exposure, with 83% agreeing that active funds were the best approach for investing in high-yield credit.
Demand for fixed income ahead of potential rate hikes may be high, but UK asset owners displayed more interest in the US and Europe than their home market.
Investment grade corporate credit was at the top of investors’ shopping lists, predominantly in the US (37%), followed by the eurozone (34%), and lastly in the UK (23%).
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