Demand for short duration bonds is thriving as the global economic recovery gathers pace and the risk of rising interest rates and a pick-up in inflation becomes more real, fund managers say.
While interest rates in major developed economies remain at record lows, signs that an economic recovery is starting to take hold has helped boost risk appetite and sparked talk that an era of ultra-easy monetary policy may be drawing to an end.
As a result, global bond investors are now switching out of long-dated bonds and taking positions in debt with a shorter duration in a bid to protect their portfolios from any surprise rise in interest rates.
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