Fixed income fund managers are confident that a Brexit will not happen in the next two years, a recent multi-manager survey from Aviva Investors shows.
The survey canvassed 26 fixed income fund managers, mainly based in the UK, managing a combined £2trn in assets globally.
Aviva also recently found, conversely, that 20 per cent of equity managers believe Brexit will happen.
Over two thirds of the fixed income mangers surveyed do not expect returns of more than three per cent for either corporate or sovereign bonds. Just 10 per cent of those surveyed expect returns of between four and six per cent and 15 per cent expect negative returns.
For sovereign bonds, 79 per cent of the fund managers expect returns of between 0 and 3 per cent and 15 per cent expect negative returns. Half of the managers anticipate negative returns for local currency emerging market debt, the survey finds.
Nearly 50 per cent of respondents also see a lack of liquidity as the biggest risk facing corporate bonds, with the second biggest concern being the withdrawal of quantitative easing and low absolute yields.
Aviva Investors head of multi-manager research Ian Aylward says: “Fixed income investors seem downbeat this year. For example, over 80 per cent expect corporate bonds returns to be negative or below 3 per cent whilst just over half expect outright negative returns from Local Currency EMD.
“Sixty per cent expect a rate rise in the UK before year end. That said, a very rare unanimous response was received – 100 per cent of managers do not expect a Brexit. This is very different to what public opinion polls would suggest.”