Fund managers bullish about bonds

A HSBC quarterly fund manager survey has stated that over half of fund managers hold a positive outlook about bonds, although investors may look towards reducing interest-rate risk.

The report stated that 56 per cent of 13 leading fund managers surveyed as part of HSBC’s quarterly Fund Managers Survey held a positive outlook about bonds in the fourth quarter of 2009, up from 30 per cent in the third quarter.

Seventy-one per cent were bullish about global emerging markets and high yield bonds (up from 43 per cent in the previous quarter) while 57 per cent of fund managers held an overweight view about European bonds.

However, they were not as optimistic about equities as an investment class, the report stated. Thirty-three per cent were overweight compared to 50 per cent in the third quarter, while 57 per cent remained bullish on Greater China equities compared to 75 per cent in the third quarter.

“The low interest rate environment has diminished appetite for cash this quarter as investors seek stable growth in still-volatile market conditions,” said Charles Genocchio, HSBC’s Australian head of global investments. “While equities will continue to provide growth opportunities, investors are less likely to expect the returns they enjoyed from the sharp rebound in global markets in mid-year.

“Bonds have performed strongly this year with the high-yield sector leading the way. However, with continued economic uncertainty, investors may consider taking positions in the high-grade corporate sector with short to medium tenors to reduce interest rate risk.”