Wednesday, June 18, 2014

Fidelity Joins Prudential as Biggest Funds Go Greek

June 18, 2014

The world’s largest investors are putting their trust in Greece’s government bond market as record-low yields across Europe compel them to invest in the country that sparked the region’s sovereign debt crisis.

Prudential Financial Inc. (PRU) owns Greek bonds maturing in five years or less and yen-denominated securities to capture the nation’s higher yields. Jupiter Asset Management Ltd. has been increasing its holdings since October and Fidelity Worldwide Investment said it has been steadily building a larger position over the past six months. Those investors, whose assets exceed $1.4 trillion, join the ranks of Invesco Ltd. (IVZ), BlackRock Inc. (BLK) and Legal & General (LGEN) Investment Management owning Greek debt.

“All the different euro-zone countries have different challenges and those facing Greece are among, if not the most, serious,” Robert Tipp, the Newark, New-Jersey based chief investment strategist at Prudential’s fixed-income unit, said in a telephone interview on June 12. “But there are a couple of things that Greece has in its favor in terms of the bond market. The relative value is attractive and the likely long-term course of these bonds is favorable.”

Greece returned to international markets after four years in April, selling 3 billion euros ($4.1 billion) of five-year securities and attracting bids in excess of 20 billion euros for the notes. Since then, yields on euro-area bonds have plummeted to record lows as the European Central Bank unveiled a package of stimulus measures to boost the region’s economy and combat the threat of deflation.


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