Aviva, Goldman, Franklin Templeton Extended short Positions

Goldman Sachs Asset Management, Franklin Templeton and Aviva Investors are among those who recently extended short positions on longer-dated government debt — wagers with the potential to pay off handsomely as a rout engulfs the global bond market.

The largest 20 euro mutual funds are similarly primed to benefit, according to research from JPMorgan Chase & Co. Real-money managers shifted aggressively to a short-duration stance last month, suggesting they are relatively well-positioned for the perfect storm gripping interest-rate markets.

Goldman Sachs Asset Management, Franklin Templeton and Aviva Investors are among those who recently extended short positions on longer-dated government debt — wagers with the potential to pay off handsomely as a rout engulfs the global bond market.

Goldman went underweight European rates in its $3.4 billion Strategic Income Fund over the summer, adding to the fund’s overall negative duration stance, according to filings.

Franklin Templeton reduced duration in its flagship Global Bond Fund to minus 1.14 years at the end of the second quarter, according to filings. The fund’s manager, Michael Hasenstab, told Bloomberg Television earlier this year that benchmark Treasury yields could rise to as high as 4 percent.

The past year has proven that it’s a difficult trade to get right, with many U.S. money managers, most notably Franklin Templeton, underperforming as they waited for yields to climb. Investors have also pulled more than $3 billion out of the Templeton fund in the year until the end of June, according to filings.

Reference

Bloomberg, Natasha Doff & Cecile Gutscher, 2018-10-04, “Big Bond Funds Seen Primed For Global Interest-Rate Lift-Off”