When even a chief fixed income strategist thinks there's too much money flowing in to fixed income, it's time to consider that he may be right.

BlackRock [">profile] chief investment strategist of fixed income Jeffry Rosenberg told Bloomberg Television that investors are courting danger by piling into bonds. And Bloomberg published a short writeup on his comments.

Rosenberg, choosing a timely metaphor, said that investors are "putting back-up generators in the basement of a flood-prone area" by continuing to invest in fixed income.

Investors "have been flocking to fixed income, and that's worked, but interest rates are at historic low levels and so there's a lot more danger in areas of the market where they think there's a lot of safety." He added that there's a danger of fixed income returns failing to keep up with inflation.

"There's been a disconnect between investor preference and investor returns," Rosenberg said. "This has been an environment where investors are driven by fear, fear of a repeat of what they didn't understand happened to their equity portfolio." 

Edited by: Chris Cumming


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