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| Steve Smith |
Brandywine Asset Management will consider buying long-term Treasuries if the bear market for bonds continues, according to Steve Smith, portfolio manager of $4.1 billion across roughly 70 accounts in Wilmington, Del. Smith, who takes a macro approach to investing, said the 30-year has been the most volatile and offers the most potential for a snap-back in yields. If the yield on the 30-year backs up 6%, Brandywine will consider adding 30-year Treasuries but could not specify how much he may add. The off-the-run long bond yielded 5.55% on May 24. Smith said he recently eliminated his investment-grade and high-yield corporate positions, which had previously totaled roughly 35%. High-yield names are too expensive, he notes, adding he will not be looking to add corporates this year, unless there is significant widening. Any addition would likely occur to high-grade securities, although he did not specify by how much.
The portfolio also has a 12% allocation in Swedish sovereign debt, 10% in Canada, 6% in Poland, 6% in Norway and 5% in the U.K. Smith recently allocated 2% of the portfolio to Brazilian paper, using new cash. The duration of the portfolio is 2.5 years, compared to that of its benchmark, the Citigroup Global Bond Index at 5.7 years.
