Managers warned unhedged global bonds could see 'huge losses' if sterling rebounds

Pound hovering over $1.23 region amid Brexit fears

UK investors have been warned global bond funds that do not hedge their holdings back into sterling are exposing themselves to potential huge losses in the event sterling bounces back from its current lows, with many investment professionals agreeing the currency is undervalued.

Having fallen around 16% since the EU referendum in 2016, the pound has been hovering around lows of $1.23 to $1.25 over the last couple of months amid Brexit fears. However, industry experts have warned the currency could rebound sharply if an agreement between the EU and the UK is reached, which could hit foreign fixed income exposures. Wealth managers dump UK assets in favour of global bond funds Chris Peel, CIO at Tavistock Wealth, said: "Sterling is significantly undervalued against the dollar and should be closer to $1.45, so investors could see potential losses of 18% in FX ...