Avoid these areas of the bond market: Artemis' Foster

BONDS

Due to the threats of inflation, oversupply from indebted governments and potentially rising interest rates, the perceived outlook for government bonds is very poor.

But many of these risks are priced into the current level of government bonds. The consensus alludes to a difficult 2010 with tax rises, political uncertainty and flat or falling house prices. This is where ‘the money’ is. Only a few forecast the economy could be better than feared, unemployment less severe and government borrowing lower than forecast. If this turns out to be even half right, then sterling will rally sharply – given everyone is positioned the other way. It would seem if there is money to be made, then it is this contrary view which might be profitable, rather than the...