One in all Sweden’s top-performing credit score managers stated bond buyers could also be among the many few to keep away from losses this yr as he predicts sells in riskier asset lessons.
Mikael Anttila SEB company bonds The SEK fund generated an absolute return of seven% final yr, which Morningstar Inc. stated was the very best of any Swedish Krona company bond fund supervisor. However this yr shall be rather more tough, based on Anttila.
“If we get a scenario the place we get a 0% return, it is nonetheless enticing,” he stated over the cellphone. “As a result of I see a threat of so many corrections in different markets.”
The outlook for funding grade bonds, a class during which Anttila is evenly distributed throughout Europe and america, has darkened to such an extent that the very best buyers might hope as a result of in 2021, it’s capital preservation, stated the supervisor of the SEB fund. He says inventory market valuations are inflated and warns of “asset worth bubbles”.
“The Nasdaq’s P / E ratio is 70 and Down Jones or S&P 500 is 30, so that they’re at all-time, unprecedented ranges,” Anttila stated.
Fund supervisor SEB is now lowering the danger of funding grade bonds by underweighting BBB notes and avoiding securities equivalent to Common Motors Co. and Fresenius SE & CO KGaA. “We’re transferring a bit in direction of higher high quality names, each in European and American markets,” Anttila stated.
With practically a 3rd of high-quality bonds in Europe now buying and selling at damaging yields and the debt burden swelling amid large stimulus packages, Anttila says some form of correction shall be onerous to keep away from.
“There are such a lot of points that we are able to see that might disrupt the market,” stated the fund supervisor. “The beginning of the yr has due to this fact already been tough.”
A notable exception may very well be belongings that meet environmental, social and governance standards, the place demand exceeds provide. “All different issues being equal, there ought to be higher long-term demand for them,” he stated.