Bond Watch: what does a bond fund manager actually do all day?

Sam Benstead breaks down the latest news affecting bond investors.

Welcome to interactive investor’s ‘Bond Watch’ series, covering the latest market and economic news – as well as analysis – that is relevant to bond investors.

Our goal is to make the notoriously complicated world of bond investing simpler, by analysing the week’s most important news and distilling it into a short, useful and accessible article for DIY investors.

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Here’s what you need to know this week.

A day in the life of a bond investor

Have you ever wondered what a bond fund manager actually does on a day-by-day basis? To find out, I went to fund manager M&G’s London office to see what goes on behind the scenes to earn an investor’s fees. M&G is one of the biggest active bond investors in the City, managing more than £100 billion.

I interviewed, and was given a tour by, Eva Sun-Wai, manager of the M&G Global Government Bond and M&G Global Macro Bond funds. I also chatted with Nick Smallwood, an emerging market financials credit analyst.

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• Day in the life of a fund manager: M&G's Eva Sun-Wai

Sun-Wai spoke about the types of meetings she has, how she interacts with debt issuers and colleagues, and how she fits together different pieces of the investment puzzle to build a winning portfolio of bonds that can deliver income and capital gains to investors.

Sun-Wai also goes into detail about her life outside the office, as well as how she got into the fund management business. Check out the video here.

I also visited the Vanguard and abrdn offices to chat with multi-asset and equity income fund managers. Vanguard builds bespoke portfolios of selected bonds to replicate an index – find out how it does it here.

USeconomy shows signs of slowing

There are signs that the US central bank’s interest rate rises are beginning to cool down the American economy at long last.

This week’s US job openings (JOLTS) report showed that the number of job openings fell to 9.9 million in February (compared with 10.5 million expected), which marked the first time they’ve been beneath 10 million since May 2021.

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Deutsche Bank said the data added to the signs that the Federal Reserve’s tightening cycle was increasingly having an effect, and the historic levels of tightness in the labour market were finally beginning to ease.

The numbers mean there is less pressure to raise rates in the US, which would be good news for stocks and bonds, so long as the economy remains healthy.

Deutsche Bank added that while the JOLTS report could be a catalyst for a market shift and more benign central banks, there were several details in the report that were less positive, such as the fact that the ratio between job openings per unemployed individual was still high.