Richard Woolnough has moved to the shortest duration risk position ever across M&G's Optimal Income, Corporate Bond and Strategic Corporate Bond funds, with the manager shunning market consensus that interest rates will continue to fall.
Confident that a recession is not imminent, Woolnough is favouring taking credit risk over interest rate risk, which is unattractive at current low rate levels globally. As a result, he has built an average duration of 1.5 years versus the benchmark 6.1, according to M&G. Speaking at M&G's Bond Vigilantes forum last week, Woolnough said that with bond yields at their current lows "you do not get paid to take interest rate risk". He added: "The upfront [valuation] numbers are not good and the term premium is not good, so you want to avoid taking those kinds of risk. "The market i...
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