Look beyond rate rises for fixed income diversification

Despite the volume of commentary at the moment, investing today is influenced by more than just interest rates so listen here for where Huw Davies sees the fixed income opportunities that lie ahead.

Correlation is rife within the fixed income asset classes but there is plenty of diversification to be found using forward rates looking two to three years’ out, according to OMGI’s Huw Davies.

He describes how he looks for opportunities by “deconstructing” the fixed income markets to find correlation in the building blocks of spot rates which, in isolation, themselves look highly correlated.

As you would expect from someone working in a rates team, Davies sees rising interest rates as a key driver though he refuses to play the game called ‘When will interest rates rise?’. Rather than making money out of timing the rate rise, listen here to why he is more interested in the market reaction to it and the level and pace of any rise.

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