Markets in “fragile equilibrium”, says Columbia Threadneedle

EquilibriumColumbia Threadneedle Investments’ Global Multi Asset Income Fund is holding more fixed income than equities for the first time in five years, in a sign reflecting how other similar funds are adopting a cautious stance as central banks work to avoid recession.

Maya Bhandari, multi-asset portfolio manager at the firm, tells Funds Europe’s October magazine issue (coming out this week) that markets are “in fragile equilibrium”. Central banks are easing policy enough to avert a recession, she notes, “but are not able to raise inflation such that interest rates might ultimately need to rise again”.

Although bonds and equities have delivered punchy year-to-date returns, fund managers see factors such as trade wars contributing to uncertainty.

“As such, we have been turning more cautious over the course of the year, lowering equity allocations in favour of low-duration European corporate credit over the second and third quarters and reducing portfolio volatility,” says Bhandari.

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