Baillie Gifford's Rodger: Why we are positioned for a Widowmaker in the West

Baillie Gifford's Stephen Rodger has argued fellow bond managers are unprepared for Japan-style deflation which is on the horizon in the West.

The manager of the top-performing £379m Baillie Gifford Corporate Bond fund is adding to duration - currently at six years - in contrast to the majority of the peer group. Bond managers who have moved short and in some cases negative duration, including Old Mutual's Stewart Cowley, have been hurt as fixed income continued to rally over the last year. Rodger said the continued bet against duration could in time be known as a second ‘Widowmaker' - as the trade shorting Japanese government bonds has been known by since the early 1990s. "Everyone thinks rates are going to go up, but I ...