Eighty-six per cent of institutional investors and wealth managers expect that there will most likely be a bond rally within the next two years.

New research from Managing Partners Group (MPG), conducted by PureProfile, of 100 investment professionals with €245bn AUM working for pension funds and other institutional investors and wealth managers, found that 23 per cent think it is very likely we will have a bond rally in the next 24 months, with 63 per cent saying it is quite likely.

Three percent believe it is unlikely while 11 per cent didn’t know.

Eighty-two per cent of respondents expect nervous investors to continue to exodus equity funds in favour of fixed-income funds.

The move from equity to fixed-income funds reflects a belief that bonds are at the start of a bull run. More than four-fifths (81 per cent) said this is where the market is headed; 10 per cent disagree and nine per cent didn’t know.

MPG CEO, Jeremy Leach, said: “A bond rally is more than likely as inflationary pressures start to ease and central banks are easing off with interest rate rises. There are clear return opportunities for investors in developed market investment grade fixed income, which will in turn lead to a bull run in the sector.”

Asked which fixed-income sectors will benefit the most from a returning bull run, institutional investors and wealth managers chose US government bonds, followed by EU government bonds, US non-investment grade bonds and then EU investment grade.

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