MutualFundWire.com: Fuss Among PMs Who Sees Bond Party Ending

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Monday, May 7, 2012

Fuss Among PMs Who Sees Bond Party Ending

Ben Bernanke is turning the lights on to gently edge bond partiers out the door. Now some bond mutual fund complexes think he may be starting to succeed, reports InvestmentNews.

By Morningstar's measure, bond fund assets have more than doubled to $2.1 trillion since the end of 2008, counting another $78.5 billion that went into these funds during the first quarter.

Yet the advisor-focused publication finds no problem getting pessimistic bond PMs on the record:

"I think it's the end of the bull market in bonds," says Dan Fuss, vice chairman of Loomis Sayles. "I don't think it's going to be a spike-type ending, but it's reasonable to assume that we're at the beginning of a secular rise in interest rates."

"People are going to shift their investment to equities and real estate. It just hasn't happened yet," is his quoted prediction.

Jeff Rosenberg, BlackRock's chief investment strategist for fixed income is also quoted:

"With the backdrop of declining interest rates over the last 30 years, investors learned to think of bonds as an alternative form of capital appreciation. As we look forward, however, we can't expect that capital appreciation in funds where we've seen it in the past."