Nomura Asset Management has been snapping up U.K. government bonds as their yields look more attractive compared with other European countries.
“Within Europe, U.K. debt is the most compelling option to invest,” Yuji Maeda, head of global fixed income investment at the $646 billion firm, said in an interview in Tokyo, adding that the Bank of England has been “taking its time” to cut interest rates. “Given that gilts still offer a yield over German Bunds, the U.K. looks easier to invest when compared with a country like France.”
Despite a tumble in gilt yields this month, the 10-year maturity is yielding about 4.4%, making it appealing for investors in Japan, where domestic bonds of the same maturity are offering around 1.6%. Nomura is not the only Japanese asset manager positive on the bonds, with Amova Asset Management also holding a slight overweight.
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