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Duration is no longer the key to finding yield

Where’s the best place to find yield? Not where it’s been in the past, according to Aviva Investors’ Nick Samouilhan.

“Over the past 10 years it’s actually been quite easy to find yield; you just buy a couple of bonds and buy credits and that gives you the yield, and when things went wrong the duration helped you. Going forward, if we’re in this world of reflation of markets grinding up, but rates also going up and inflation coming through, it all changes.

“You need to be far more specific on how you get yield – we would favour things like emerging market debt and equities over developed market equities and developed rates – and within that you need to be very careful about what goes wrong.

“[At FundForum] we’ve been speaking a lot about how there’s this huge risk that if inflation comes through, if rates start to move – in that world duration starts to cost you. And what you must have is a portfolio that gives you the income but at the same time worries about the capital particularly in that environment. Our multi-strand approach allows us to be very specific and very focussed and very diverse in doing that.”

This video was filmed at FundForum International 2017. Find out more about the world's leading asset management event.

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