Aviva Investors' Vokins on why he has cut exposure to US credit

Rise in anti-globalisation sentiment

The fixed income market is now entering uncertain waters as rates rise globally and central banks unwind the accommodative policies pursued since the global financial crisis.

US credit appears especially vulnerable in the short term and we have reduced our exposure there, preferring euro and sterling corporate debt. Foreign ownership of US credit reached staggeringly high levels last year, rising by $900bn and leaving about 40% of US dollar-denominated corporate bonds in the hands of foreign private institutions. Huge stimulus programmes by the European Central Bank and Bank of Japan have driven domestic yields into negative territory, encouraging investors to seek higher returns in the US and elsewhere.  Morgan Stanley disputes Bill Gross's bond bear m...