GLOBAL - Global bond markets have outstripped their equity counterparts for the second year running, according to new data from ratings agency Standard & Poor's (S&P).
Median global bond funds registered returns ranging from 0.9% to 4.5% over the 12 months to February 1, 2002, compared with equity performance which slumped 21% in sterling.
Commenting on the report which comprised 63 funds, James Tew, European head of research said: “Strong fundamentals provided global fixed interest managers numerous opportunities to outperform last year.
“Nearly all funds that have satisfied our criteria for a rating have been ahead of sector median performance.”
Corporate bonds performed particularly strongly over the period, even outperforming treasuries in both price return and income, said S&P.
According to the agency, high levels of corporate bond issuance gave fund managers plenty of choice and stressed the importance of sector selection and assessment of credit risk. As a result, a number of fund managers changed benchmarks from global bond indices to global aggregate indices to reflect the growing role that credit is playing in security selection.
Currency decisions were also pivotal in boosting global bond returns; successful strategies included overweighting the US dollar, underweighting the Japanese yen and tactical trades in the euro.
By Madhu Kalia
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