DAILY OR WEEKLY bond price movements amount to no more than 'a lot of noise' that distracts too many investors, particularly in Asia, says Raphael Kassin, manager of ABN Amro's Global Emerging Markets Bond Fund, which took honours this year in the fixed income global emerging markets sector over three and five years.
'We don't manage on a month-to-month basis. The truth is that a lot of people, especially in Asia, get very worked up about daily or weekly returns, which usually amounts to no more than a lot of noise that has nothing to do with the health of the markets or economies,' he said.
Instead, as a fund manager, he has a six- to 12-month horizon for taking profits on his bond positions.
'Most investors will come in as part of risk allocation and sit on their investments for a couple of years and earn a return of 10 to 20per cent. So the fund is a high-risk, high-return model that is not suited to an investor focused on quarterly performance.'
Over five years, the US$4.4billion fund showed a 22per cent return against a benchmark return of 13.6 per cent. The fund is measured against the JPMorgan EMBI Global Index.
Mr Kassin said there were several major investment plays unravelling on world financial markets - one of which was speculation about the end to the 'carry trade' on using low-interest borrowings in Japanese yen to buy higher-yielding currencies - and investors would be wise 'to wait for the other shoe to drop'.