Bond managers shift focus from core names to peripheral Europe

Leading fixed income managers have been adding exposure to peripheral eurozone bonds as value dries up in the investment grade corporate space.

Strategic bond managers have been snapping up short-dated peripheral paper in Spain, Italy and Ireland, cutting back positions in core European names which they say have limited upside potential after a strong run in 2012. The move comes as renewed political uncertainty in the eurozone saw Spanish 10-year yields hit 5.5% and Italian 10-year yields reach 4.4% last week. Richard Hodges, manager of the £1.6bn L&G Dynamic Bond trust, has added 10% to peripheral sovereign and corporate debt in recent months, taking total exposure to 15%, and has begun shorting core stocks. Hodges has ta...