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Bond PMs look lost in ‘artificial world’, warns veteran

Bond PMs look lost in ‘artificial world’, warns veteran

An alarming number of bond managers operating today are unaware of how close the market is to collapsing, according to fund selection veteran Jacques Bossuyt.

The Luxembourg-based investor said he is taking an exceptionally conservative stance in bonds due to what he views as an increasingly troubling outlook for the asset class.

‘Bonds in general are in a bubble, and most of the fund managers have never been confronted with those artificial conditions we know today,’ Bossuyt told Citywire Selector.

‘They don't know what to do. And, what is most dangerous of all is, they don't know that they don't know. So I'm very prudent in the bond sphere. You can see that by which funds I have in my portfolio.’

Bossuyt said his firm, Novacap Asset Management, has trimmed back US inflation-linked bond funds in clients’ portfolios, with the most recent additions being largely focused on areas of the market deemed secularly strong or uncorrelated.

He recently added the Aberdeen Global Indian Bond fund, which is run by Citywire + rated Adam McCabe, but is being forced to broaden his horizons for investors unwilling to go 100% into equities.

‘Therefore I have also Capital Gestion Bond Euro Plus, the Fidelity Asian High Yield, Pimco Income and UBAM Global High Yield funds. In some portfolios I have fixed maturity funds, as at least they have no duration risk, but you have no guarantee of getting your money back.’

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