Finding fixed-income value amid low interest rates

Central banks are pushing investors away from high-quality bonds, says David Lafferty of Natixis.

Jess Morgan 10 March, 2016 | 6:00PM

David Lafferty, chief market strategist at Natixis Global Asset Management, says tighter monetary policies have not affected the performance of investors' bond portfolios -- but they have made the ride rougher.

"The U.S. Federal Reserve has actually done very little" in terms of interest rates, says Lafferty, who joined Natixis in 2004 after covering fixed-income and asset allocation products for State Street Research. "They've only moved a quarter of a point. They appear to be on hold, at least for the next three to six months. We don't expect another tightening until at least June, maybe even September. But all the discussion about when and how quickly they're going to move has created a ton of volatility in the interest rate market."

The bear market of early 2016 has pushed central banks worldwide to lower interest rates further in the hopes of creating economic stimulus. The Bank of Japan (BOJ) and the European Central Bank (ECB) made headlines by entering negative territory; however, Lafferty believes that's only the beginning.

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Jess Morgan

Jess Morgan  Jess Morgan is the associate editor of Morningstar Canada’s website. She began her career as a television producer and freelance writer, often making appearances on TV and radio as a commentator on politics and culture. She holds a BA in communications from the University of Winnipeg and a diploma in Creative Communications from Red River College.

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