Tuesday, January 5, 2010

Oakley, van Duyn: funds cut bond holdings

Pimco, one of the world’s biggest bond funds with $940bn under management, warns that the record levels of government bond issuance in the US and UK and the end of loose money will put financial markets under intense pressure...

Paul McCulley, managing director of Pimco, said: “For interest rate exposure, or duration, we are currently cutting back in the US and the UK.”

He identifies rising government bond supply and the end of central bank buy-back programmes – which have kept government bond yields lower – as the key reason for reducing exposure to the US and UK.

BlackRock’s European funds have one of its lightest allocations to the US and UK sovereign fixed income markets for two years. Barings has cut investment in the US and UK.

Standard Life Investments has not reduced its portfolio in the US and UK yet, but warns these markets face grave risks...

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