Hedge fund managers at a major industry conference have said that they are favouring fixed income, over stocks and real estate amid an uncertain interest rate outlook and fears of a recession and US debt default, according to a report by Benzinga.
Hedge fund managers at a major industry conference have said that they are favouring fixed income, over stocks and real estate amid an uncertain interest rate outlook and fears of a recession and US debt default, according to a report by Benzinga.
Delegates at the Milken Institute Global Conference said this week that the pivot to fixed income, which was unpopular when interest rates were low, is resulting in strong inflows into products like bonds.
Elizabeth Burton, a managing director and client investment strategist at Goldman Sachs said the shift in focus has been quick and is forcing investors to move away from some assets including the “saviour asset class” real estate, that had been popular up until six months ago.
While is the S&P 500 up 7.5% since January after losing nearly in 2022, managers are worried that that big companies like Microsoft and Apple that helped pull the index higher this year may be overvalued. Others have warned that many companies will also soon have to refinance their debt at higher rates, making them less attractive.
With a string of rate rises designed to tackle soaring inflation, “The Fed has helped us put the income back in fixed income,” said Anne Walsh, Chief Investment Officer for Guggenheim Partners Investment Management.
