T Rowe Price is a US fund manager based in Baltimore and founded in 1937. It operates fixed interest and equity funds in sixteen countries around the world. Its head of international fixed income, Arif Husain, was in Sydney this week speaking at a lunch briefing and he has made some observations which raised a few eyebrows.
The controversial part of his comments related to his views on Australia, and how it was in a similar economic situation to Germany’s ten years ago. “Australia is different right? I was in Germany five years ago, they said they were different. Now look at that, they are pretty much like Japan.” Many German bonds now trade at negative yields and Mr Husain thinks the same could happen here. “Australian investors have so far escaped the worst of the low yields in fixed income – I’ve seen clients in Europe doing some dumb stuff just to get back up to zero rates – but I would not be surprised to see negative yields hit this market at some point.”
