Insight Investment Management, which manages roughly E50 billion in government and corporate bonds, is looking to buy emerging market sovereign debt to add yield. London-based Adrian Grey, head of European fixed income, says "emerging markets continue to provide some interesting yield enhancement opportunities. We have a relatively high degree of confidence in high yielding sovereign opportunities rather than high yielding corporates." He is considering Tunisia, Russia and Brazil. He declined to say how much he would dedicate to the asset class.
Grey also prefers Europe to the U.K. He is planning to switch out of U.K. bonds into the European core markets--Germany, France and The Netherlands--once U.K. yields go modestly higher than where they are now. He says Europe is good value because inflation and short rates are going lower and should underpin the market. Again, he declined to say how large the trade would be.
The economic backdrop is not helpful to the corporate environment, which continues to be quite challenged, notes Grey.
Insight is broadly neutral corporate bonds vis-à-vis benchmarks. Grey says he is skeptical of industrials and cyclically sensitive names. Insight uses a range of benchmark indices.
