The bull run for bonds still have a way to go next year, Wellian Investment Solutions investment director Chris Mayo says.
Although Mayo is still cautious on sovereign debt because of the unattractive yields on offer.
“Contrary to popular belief, we do not think the credit cycle is quite over yet,” he explains.
“While interest rates remain low – which we believe they will do until at least the third quarter of next year – bond managers will continue to make money from fixed income assets as opportunities arise.”
There is unlikely to be a bond rout as long as interest rates rise slowly, he adds.
Wellian’s prediction is for the Bank of England to start raising rates gradually in early autumn next year.
Meanwhile, Mayo is bullish on US equities, but less so on British companies where growth is likely to be “stable but subdued”.
“The latest employment and housing market data from the US continues to improve and is a clear indication that the US is the most stable worldwide economy at present, which is why we remain optimistic on US equities for the year ahead and will continue to be overweight in our model portfolios,” he explains.
The discretionary model portfolio company is based in Tunbridge Wells.