Charles Royce of the Royce funds comments on bonds in his Q3 letter.
I think the word bubble is much too strong. However, I do think that bonds could be entering a bearish phase because in certain areas of the fixed-income market, we’re seeing too many investors chasing yield or looking for safety. The junk bond market, for example, looks far too risky to me currently, as do certain high-yielding areas of the stock market where people don’t seem aware of the risk they are taking to achieve a desired yield.
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According to a recent Credit Suisse survey, investors are more interested in hedge funds than any other major asset class going into the second half of the year. Q1 2020 hedge fund letters, conferences and more This is a big switch from investor sentiment in the first half of 2020. Indeed, hedge fund launches slowed Read More
In certain places, I do think there’s a scenario where bondholders may begin losing principal, which could create a swing back to equities. However, in the more standard fixed income world, there are institutional needs that are not likely to change.