Looking for two cents? This fund manager finds bonds concerning(Read article summary)
The Reformed Broker shares one of his favorite fund managers with The Monitor. Dennis Stattman is not a household name, but Brown thinks he is one of the greatest asset allocators in the history of the industry.
Dennis Stattman (BlackRock Global Allocation) is not a household name fund manager but he is truly one of the greatest asset allocators in the history of the industry.¬† I've been an investor with his fund for almost a decade now, he's been at it since 1989.
I'm always interested to see how Dennis is positioned asset class-wise and geographically given that he has a mandate to go anywhere he sees a good risk-reward profile.¬† Right now, he is very concerned about the risks in bonds; he's carrying a 50% lower bond weighting than his world allocation fund peers ...
From Investment News:
‚ÄúTo put it simply, I think the bond market in general is bad value right now,‚ÄĚ...
The 10-year Treasury, which is currently yielding 1.66%, is of particular concern to Mr. Stattman. ‚ÄúWith that yield, it's easy to imagine losing an entire year's coupon in a single bad trading session,‚ÄĚ he said. ‚ÄúThat's really disturbing to me.‚ÄĚ...
‚ÄúWith TIPS you have to go 16, 17 years out on the maturity to get a break-even yield,‚ÄĚ he said. ‚ÄúThere's a great deal of risk in high-yield right now, too. The default rate is about as low as it's going to get, and the momentum of the economy is not encouraging.‚ÄĚ
Mr. Stattman's fixed-income outlook is contrarian to the general investor community. Year-to-date through the end of May, investors had put over $110 billion more into taxable bond funds than they had taken out, compared with $80 billion of net inflows over the comparable five-month period last year, according to Strategic Insight.
Lots of people express concern about bond risk, not many (according to the flows) have actually stopped buying them though.