The crowded trades ringing alarm bells for investors

A prolonged rally in both equities and bonds has left investors facing a challenge to diversify away from crowded trades in recent months. Investment Week asks fund managers and buyers which trades in particular should be raising the red flags.

Andrew Dalton head of investment services, SG Hambros   Corporate bonds The crowded trade that gives us most concern is the corporate bond market. Low interest rates have pushed investors into bonds as returns on cash came close to zero. At the same time, markets have become illiquid as dealers, under pressure to minimise capital used, are no longer willing to hold significant stock of bonds. Currently inflation is very low and set to remain so for the rest of the year as the impact of falling energy prices feed though, but we are beginning to see the first signs of wages edgi...