Bond fund managers position for Fed taper in higher quality credit

NEW YORK: Managers of global bond funds are positioning for the US Federal Reserve's expected plans to taper its asset purchases, by cutting average maturities of portfolios in some cases while moving into the less risky investment-grade corporate debt in others.

Some fund managers, who were interviewed on the Reuters Global Markets Forum this week, are investing in high-yield debt in Argentina and Ukraine, seeking exposure to private credit markets or finding value in sectors such as energy and materials.

The following are some quotes from bond fund managers:

JAE YOON, Chief Investment Officer, New York Life Investment Management, NEW YORK

"We are holding a shorter maturity high-yield and added municipal bonds as diversification to investment-grade corporate debt.

"Private markets offer great inflation-adjusted returns, and opportunity to add value is strong.

"We (offer) senior loan, unitranche and mezzanine that range from 7%-15% returns. These are extremely attractive rates in today's environment. Also, in public market, we like municipals (bonds) and infrastructure segments where we have better yield profile."

WARREN PIERSON, Deputy Chief Investment Officer, Baird Asset Management, Milwaukee, Wisconsin "Demand for bonds has squeezed credit spreads very tight at or very near historic levels. The bond market is pretty picked over though ... we're being much more selective than we were when spreads (were) much wider.