Striving for dullness
Fraser Lundie, co-head of Hermes Credit, makes a similar point talking about the firm’s new fund, explaining that it follows the firm’s philosophy that “investors must look beyond issuers and focus on a multi strategy approach which incorporates both long and short investments across multiple security types including loans, bonds and CDS.”
There is no doubt that currently bond markets are not really the dull part of the market they once were. And, on current evidence, the market itself is likely to only get more exciting, which is making life hard for managers.
As Winship puts it: “People have looked at fixed income for the last thirty years and it has been nice. But, if you are going to get anywhere near that now you are going to have to work a lot harder to achieve nice, dull returns.”
“Because the last 30 years have been pretty much all one way, there are a lot of fixed income products now that are not really relevant for today. We have been focused on trying to ensure we make our product relevant for when rates bottom out. But it is not easy,” he added
So, from a wealth manager’s point of view, new funds that aim to provide flexibility and downside protection, like the Hermes offering or, in the case of the Nordea Fund, (a Renminbi high yield bond fund) provide optionality to investors in terms of currency and region are likely to be welcomed – assuming of course they do what they say on the tin. But, in a world of decidedly un-dull markets, such assumptions are difficult to make with certainty.
