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Bond markets ‘at a turning point’

As interest rate hikes loom and quantitative easing ends investors need to be creative to find value in fixed income according to a bonds market expert.

Jessie Gisiger

Credit Suisse fixed income credit specialist, Jessie Gisiger, said: “We’re going through a difficult time”.

Bond markets are “going through a turning point with the move away from quantitative easing,” she said and as a result, fixed income investors need to “keep an open mind, be dynamic, and be active in risk management”.

So what should investors look at beyond developed market corporate and government debt?

“We expect outperformance from emerging markets local currency bond unhedged,” she said.

Gisiger said Credit Suisse had been including convertible bonds in the portfolios of its traditional fixed income investors to offer some positive beta.

“Usually during a time when equities are doing well fixed income tend to lag due the expectation of growth along with the central bank hikes. Convertible bonds create a quasi-neutral hedge in the portfolio,” she said.

Gisiger also said the bank is looking at floating rate bond funds and alternative credit.

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