Speaking on a webcast earlier today, Read said, in the current market, if you take no risk, you are going to get zero return.
“We will still be a relatively safe provider of income, you have to manage your expectations of returns in this asset class,” he said.
Explaining that although spreads have come in and fixed income markets have rallied, said: the world remains in:
“A low-yield, low-inflation environment with a slightly conflicting central bank agendas”.
Asked about his main worries going forward, Read said that he is currently not having many sleepless nights because the group’s funds are defensively positioned with a fairly low modified duration and high levels of liquidity.
But, he said: “My worry is we could be in a period similar to 2006, 2007 where this relatively expensive market continues to rise. So, my concern is around disappointing performance in the medium term. But, we have made a lot of money when there was more value and now we might need to sit this phase out a bit.”
Read currently continues to prefer equities to bonds in the current environment but it is, he said, a slightly harder call than it once was because everything has rallied.
“European equities have rallied, but bonds have rallied a lot too,” he said, “There is even less value in bonds now than there was at the beginning of the year.”
