Three quarters of funds feel corporate bonds overvalued - survey

By John Geddie

LONDON (Reuters) - Three quarters of fund managers consider corporate bonds overvalued, the highest percentage since the CFA Society of the UK began surveying them three years ago.

It said 76 percent of the 272 mainly UK-based funds saw corporate bonds as overvalued while 81 percent felt government bonds were overvalued, the most of any asset class.

A third of euro zone government bonds have negative yields - meaning investors are effectively paying for the privilege of lending governments money - a share that has been growing since the European Central Bank began its bond-buying scheme this month to boost the economy.

"Our ... results suggest that investment professionals feel that the prospects for additional benefits from QE may be limited," said Will Goodhart, chief executive of CFA UK.

The quarterly survey also found that the percentage of respondents that regard developed market equities as overvalued spiked to 52 percent from 10 percent in fourth quarter 2014. Emerging market equities was the only asset class regarded as undervalued, with 43 percent holding this view.

The latest survey of analysts and investors was conducted between Feb. 17 and March 9, 2015. Respondents were asked to rate assets in terms of fair value over a one-year investment horizon.

(Editing by Ruth Pitchford)