Aberdeen: Big groups are moving to combat bond liquidity risks

Large fixed income houses are being forced to expand the overseas investment capacity of their funds and use more derivatives in a bid to mitigate liquidity risks in the bond market.

Aberdeen Asset Management's senior fixed income manager Roger Webb (pictured) said groups such as M&G, LGIM and Aberdeen itself are working on adapting their businesses to offset the liquidity risk prevalent in the bond market. The recent sell-off in bonds has seen US treasuries approach their biggest quarterly loss since 2010, while German bunds saw yields on 10-year debt rise from a record low of 0.05% in April to almost 1% earlier this month. Webb said: "We recently had a series of meetings with the Financial Conduct Authority and they are very keen for us to stress that liquidity ...