Global investors paring riskier bond holdings

[NEW YORK] Some of the biggest global investors have started to pull back from riskier fixed-income assets even as the Federal Reserve keeps on a green light for risk.

GAM and Standish are among those who say US investment grade and high-yield corporate bond prices have gone too far, making returns less compelling. They're aiming to get ahead of a market reversal that could be unpleasant once the Fed starts raising interest rates, probably next year.

"Valuations are getting stretched," said Jack Flaherty, investment manager at GAM, part of GAM Holding AG, a publicly listed Swiss company with more than US$120 billion in assets. "You'd rather be early in getting out because when it does…