The outlook for fixed income may still have risks but asset allocators have been moving out of their money market funds back into the asset class.

In this latest podcast, Giles Parkinson, senior fund manager at Close Brothers Asset Management and David Baxter, funds editor at Investor's Chronicle, speak to Asset Allocator's contributing editor David Thorpe about the response to rising yields across the market in 2022. 

For Close Brothers, the team had up to the 20 per cent mark in money market funds last year. Parkinson told Asset Allocator: "We were looking to effectively dodge the bullet that was speeding towards fixed income last year as an asset class.

"We wanted to keep our duration short."

But he said the team was now starting to spend that money, taking it down past the 10 per cent mark.

He said: "We've now seen that starting to change and have been moving out of money market and back into longer-term bonds as we began to gain conviction as a team that potentially interest rate rises around the world had stopped and central banks were towards the end of their hiking regime, rather than at the beginning."

Investors' Chronicle readers have also felt the same concerns in fixed income in 2022 and have now started to feel that bonds look a bit more interesting in 2023, according to Baxter.

The Asset Allocator Podcast is a fortnightly series aimed at discretionary fund managers, fund selectors and wealth managers, providing insight into the issues that drive investment decisions.

To listen to the full discussion, click on the link above. 

simoney.kyriakou@ft.com