Structurally high levels of debt across the globe will lead to continued high levels of market volatility, says Fidelity’s Ian Spreadbury.
Speaking on the Brewin Dolphin Podcast, Spreadbury, manager of the Fidelity Moneybuilder Fund said that he is in the slow growth low inflation camp, and expects the environment to remain tough until the world’s debt problem is resolved, something he believes is likely a long way away.
Despite this, however, he believes there remains a decent case for investing in bonds.
“That does not mean, however, that he does not but I think there is and we have seen it manifested in recent weeks, we have seen a lot of underlying systemic risk and I think that will be with us until the debt problem is solved which is likely a long way away.
Despite the fact that bond yields are low by historic standards I think there is a decent case for investing in bonds.
“Historically, bond yields and high quality bond yields in particular have been driven by nominal growth expectations so in a low nominal growth environment, I think yields are likely to remain low.
“Returns will be a bit lower than they have been in the past 10 years, but I think they will do a decent job of providing income, relatively low volatility and, in the case of high quality bonds, a good equity diversifier,” he said.
