Deep Dive: Bond managers must 'unlearn' the past decade of central bank lessons

‘Japan remains an outlier’

The past year of central bank moves and their recent and forthcoming effects have changed the relationship between portfolios and markets, and bond managers must "unlearn” the investment lessons of the past decade if they are to succeed.

Speaking to Investment Week, Adrien Pichoud, chief economist and senior portfolio manager at Bank Syz, explained that a decade of ‘ZIRP', or zero interest rate policy, had forced investors to extend maturities, or climb down the credit rating scale in order to secure positive yields. However, with a return to interest rates levels not seen since 2008, resulting in cash rates between 4% and 5% across USD, GBP and EUR, credit and duration risk were "no longer unescapable", he said, and had instead become "directional options" as "risk-free money market instruments" offer such yield. Bro...