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AAA-rated Anderson:Gilt inflection point not until 2012

by Matthew Goodburn on Oct 29, 2010 at 12:08

AAA-rated Anderson:Gilt inflection point not until 2012

Gartmore’s Citywire AAA-rated head of credit John Anderson thinks that gilts are some way from an inflection point despite a belief that shorting gilts has been ‘an easy call to make for the last six months.’

Citywire Selection pick Anderson has been increasing the short duration and high yield element of his Corporate Bond and Fixed Interest funds and does not believe that point will come until at least 2012.

Anderson said: ‘We will not see an inflection point until the Monetary Policy Committee (MPC) makes it clear that it is ready and willing to start tightening monetary policy here in the UK.’

‘But that will be later rather than sooner and probably not before 2012.’

Anderson’s comments follow those of  fellow Citywire Selection manager John Pattullo, co manager of the Henderson Preference & Bond and Henderson Strategic Bond funds with Jenna Bernard.

Pattullo (pictured) thinks that point is a little closer.

He said: ‘The biggest call for bond markets and bond investors is when does this [30-year bond bull market] turn? We sense it could turn in the next three to nine months. I think we are approaching the end of a long-term structural bond bull market.

‘Timing now is not going to be easy but it’s something we are mindful of. Valuations are definitely expensive but not absurd – not yet anyway. It is the biggest call of my career and we have to get that right.’

Meanwhile, Anderson is not surprised by the UK’s upbeat Q3 GDP numbers which he says come against a backdrop of ‘a devalued currency and the availability of cheap credit’ and thinks the UK may not now have a second round of QE.

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