Chris Dillow 

Systematic overpricing

Chris Dillow

Chris Dillow
Systematic overpricing

Bond investors have long been familiar with 'preferred habitat' theory. This is the idea that some investors prefer different types of bond: – pension funds, for example, want very long-dated ones while insurance companies prefer medium-dated ones. This means some bonds can become overpriced not because of speculative frenzy but because demand for them has increased from their particular client base. And they can stay overpriced because they are poor substitutes for other, apparently cheaper, bonds.

To continue reading, subscribe today

and enjoy unlimited access to the following:

  • Tips of the Week
  • Funds coverage
  • Weekly features on big investment themes
  • Trading ideas
  • Comprehensive companies coverage
  • Economic analysis
Subscribe
Subscribe to Investors Chronicle

Related topics

Subscribe today

Full access for just £3.37 a week:

• Tips and recommendations - to beat the market 
• Portfolio clinic & Mr Bearbull - build a well-planned portfolio 
• Expert tools - track and manage investments effortlessly
• Plus free delivery to your home or office

Subscribe Now