Bond fund managers who bucked a market consensus earlier this year that long-term interest rates and inflation were headed sharply higher have been rewarded with outsize performance during the market switchback of the past few weeks.
Star managers including Scott Minerd at Guggenheim Partners and Stephen Liberatore of Nuveen are riding high in industry league tables, after US Treasury yields plunged as low as 1.25 per cent this week, compared with a peak above 1.7 per cent at the end of March.
Markets have come round to the view that the global economic rebound will soon decelerate, and the US Federal Reserve is unlikely to lose control of inflation.
“Ultimately the market ran too far in front of the recovery,” said Liberatore, lead portfolio manager for Nuveen’s fixed income strategies, whose core impact bond managed accounts have outperformed all their peers since the end of March.
“We are more likely to go below 1 per cent…