Industry Insights: Managing Fixed Income Portfolios in a Rising Interest Rate Environment
He explained that for basically his whole career, there have been benign conditions for bonds, primarily in terms of inflation and interest rates (both the levels and volatility). His view was that many "star" fixed income managers were possibly not that talented and had simply benefited from these conditions...
Andy then moved onto what the options are if and when those conditions start to change. What I took away from his presentation was that for managers who are constrained by benchmarks, life could get very difficult indeed. The cost of purchasing insurance (puts) will be prohibitive. However, for unconstrained managers who can go short as well as long, it should still be possible to make reasonable risk adjusted returns for investors.
Andy also shared some very interesting thoughts on careers. His view was that the conventional perception that sales and trading or work on the sell side was the most glamorous area of finance is no longer true. In fact there are many interesting and challenging jobs on the buy-side, and often research roles can be as fulfilling as front office roles. Note that this view is based on his experience in both the buy-side and sell-side, AND on the trading floor and in research and portfolio manager roles - so it is telling that he has come to these conclusions.
Thanks to Andy for a great talk, and for taking the time to mingle with students afterwards.
You might also like
Research success for ICMA Centre lecturer
The ICMA Centre’s Dr Ioannis Oikonomou has reason to look fondly on 2012 as he has experienced two significant academic successes in recent months, which are bringing wider recognition across Europe to the research he is undertaking.
ICMA Centre welcomes international students for research project
We’re delighted to welcome students from the University of Mary Washington (UMW) from Virginia in the US to take part in two University of Reading Undergraduate Placement (UROP) projects based at the ICMA Centre. This is the first time that the UROP programme has been opened to international students.
ICMA Centre announces accreditation programme by the Professional Risk Managers' International Association for MSc Financial Risk Management
The ICMA Centre's MSc in Financial Risk Management has been accredited by the Professional Risk Managers' International Association (PRMIA).