Jupiter Asset Management has liquidated its US Treasury holdings from one of its primary bond funds, redirecting the capital into European government bonds.
Harry Richards, who co-manages the £1.3 billion ($1.7 billion) Strategic Bond fund, stated he completely exited US Treasury positions two months ago and now holds only minimal amounts in four other funds he assists in managing. He pointed out that signs of an "overheating" US economy suggest a greater likelihood of interest rate hikes compared to Europe, diminishing the appeal of US government debt.
This marks the first time in nearly a decade that the fund holds no US Treasuries. While Jupiter's move is strategic, it aligns with growing investor concerns over soaring national debt, persistently high inflation, and questions about central bank independence—issues that are particularly pronounced in the United States.
"We have rotated into other markets where we see better relative value," Richards said. He manages five funds totalling $6 billion at the London-based investment firm, which oversees $91.3 billion in assets.
The bet has paid off: the fund's performance year-to-date has surpassed 93% of its peers. According to Bloomberg indexes, US Treasuries have incurred a 0.1% loss for investors since late April, while German government bonds have delivered a 0.6% return.
Richards noted that US Treasuries are widely regarded as a global safe-haven asset. However, if no investment opportunity is visible and the risks at a given point outweigh the potential rewards, the fund is prepared to act as a contrarian investor.
Comments