For our weekly Deep Dive, Sam van de Schootbrugge reviews a Bank of England working paper on government bond markets. This excellent piece (not mine, the bank’s) looks into how a subset of non-dealer institutions can forecast gilt returns. The punchline? Nimble hedge funds are good at trading ahead of other investors’ future demand; mutual funds are instead more concerned with economic fundamentals.
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.
(total reading time: 1 mins)
For our weekly Deep Dive, Sam van de Schootbrugge reviews a Bank of England working paper on government bond markets. This excellent piece looks into how a subset of non-dealer institutions can forecast gilt returns. The punchline? Nimble hedge funds are good at trading ahead of other investors’ future demand; mutual funds are instead more concerned with economic fundamentals.
Enjoy!
Bilal
How Hedge Funds And Asset Managers Make Money In Bonds (9 min read) The UK bond market is the fourth largest in the world with a total market value of $6,249bn in the first quarter of 2018 (BIS, 2018). There are four main types of non-dealer investors: i) mutual funds (MFs), ii) hedge funds (HFs), iii) non-dealer banks, and iv) insurance companies and pension funds (ICPFs).
(Sam van de Schootbrugge │ 19th August, 2020)
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)