Clauses & Controversies
Ep 41 ft. Josefin Meyer
Jun 28, 2021
Josefin Meyer, a young star in the sovereign debt world, discusses her research on investors in sovereign bonds. They explore the astonishing returns investors have received despite defaults, like those in Lebanon and Argentina. The conversation delves into current Covid-era sovereign bond yields, including negative yields for Greece.
44:56
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Quick takeaways
- Sovereign bond investors earned higher than expected returns over 200 years, challenging standard finance models.
- Excess returns on sovereign bonds exceed risk compensation, raising questions on investor risk perceptions and neutrality.
Deep dives
Discovery of High Excess Returns on Sovereign Bonds
The podcast discusses Josefene Meyer's research paper on sovereign bond returns, revealing steady high returns over the past 200 years. The study finds that global external sovereign bond portfolios outperform risk-free assets, with excess returns ranging from four to six percent, especially notable in today's markets. Meyer emphasizes that the high excess returns are not limited to individual bonds but apply to entire portfolios.
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