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Bonds back in black as investors de-risk

by Robert St George on Mar 18, 2014 at 07:15

‘Don’t chuck out bonds,’ Howell advised. ‘They are not as bad as many people have been making out.’

ETF investors also seem to be siding with Howell on his continued scepticism over emerging markets. For him, the problems will emanate from China, where he observes that liquidity has jumped 400% since 2006, while liquidity in the rest of the world has risen by just 80% through the same period.

‘That is very scary because it is coming to an end,’ Howell said. ‘China is turning off the tap.’

The ETF community has duly taken fright and flight. February witnessed emerging market outflows of £2.7 billion, taking the year-to-date exodus to £7.9 billion. That is already more than the £6.2 billion that was withdrawn from emerging market ETFs through all of last year.

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