Managers seek to exploit 'distorted' gilt market but warn on risks after 'heroic gains'

Bonds investors seeking opportunities across the globe

Bond investors are being forced to reassess their gilt positions, with some looking across the globe for more compelling opportunities, as the Bank of England's larger-than-expected QE package creates one of 'the most distorted fixed income markets in the world' and concerns grow about the risk/reward profile of the sector.

Although countries with negative interest rates, such as Japan and Switzerland, have seen huge distortions in their own government bond markets, the UK market has been impacted by the repercussions of June's Brexit vote and the Bank of England's (BoE) response earlier this month to help keep the economy on track. Ten historic central bank moves Benchmark 10-year gilt yields fell from 1.01% on the day of the referendum to a fresh record low of 0.56% on 10 August and are still around this level following the BoE's move to cut interest rates for the first time in seven years from 0.5% to...