This was our first introduction to the strategy. In terms of the performance, we have used Quilters as this is the same strategy that they run under a segmented mandate. The team came from Merian and brought across the Head of Fixed Income Dealing and Head of Investment Operations to ensure the team stayed together. They have added a credit specialist to the team. We talked about the macro position and then focused in on the Monthly Income Bond Fund.
They believe that demographics are a big driver of the bond markets. As people get older, they accumulate more assets and naturally they buy more bonds. As evidence of this they used the correlation between the US labour market growth and US 5-year yield which showed a rate of 82%, and the Bank of England speech ‘running out of room’ which shows the greatest accumulation really starts from 50 up to 69 when it starts to drop back…..read more