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Holdings in US fixed income up 50% in year to date

US- Holdings in fixed income in the US have already risen by more than 50% this year and now stand at $9.2trn according to a study of the institutional bond market by Greenwich Associates, the US research consultancy.

In addition, total cash bond trading volume excluding short-term instruments increased in the US by more than 30% in 2002 to $10trn although Tim Sangston of Greenwich says the growth has varied according to product and institution.

One of the key findings of the research, which is based on more than 1,300 interview with US institutional investors, is that the market continues to be highly concentrated despite the growth, with the largest 10% of investors generating 80% of the trading volume.

As a proportion of the total, volume increased in investment-grade credit bonds from 17% to 20% and fell in government bonds from 30% to 26% and remained static for short-term instruments at $14trn.

The report also shows that since 2001, holdings are up in investment-grade credit bonds from 23% to 28% of the $9.2trn total, while holdings in mortgage-backed securities fell back from 39% to 36%.

It also concludes that fixed-income investors continue to express a preference for specialist coverage; in general, the less liquid the product, the greater the demand for specialist sales coverage.

More than 70% of investors in high-yield, distressed, emerging market, and syndicated loan products prefer specialist coverage, while less than 35% of investors in treasuries, agencies, and short-term products do so.

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