Bond funds screen out ‘big gorilla' trades on liquidity fears

Corporate bond managers have begun to shy away from participating in deals dominated by some of their larger peers as market liquidity continues to contract.

James Foster, manager of the Artemis Strategic Bond fund, said liquidity in the market is “more likely to get worse than better” as central banks begin to scale back asset purchase programmes. Consequently, he has become more cautious when it comes to buying alongside some of the larger names in the bond market. “We have done more recently in terms of trying to avoid the biggest deals, those which tend to be bought by the biggest funds,” Foster said. The investment grade corporate bond market is the greatest concern for the Artemis manager, particularly given elevated valuations an...