The head of research at the firm (pictured below) thinks it is far too early to write off bonds when economic fundamentals are so fragile.
"What we’ve had has been quite remarkable, I’m calling it the impossible rally," he said. "We’ve had markets basically double, which you’d never believe given the macro worries over the period."
Performance of index and sectors over 4yrs
Source: FE Analytics
"The pull-back we saw last week was a reminder that a lot of those worries are still there. I don’t see interest rates in the UK going up until well after the next election, so all this talk of a bond bubble is nonsense in my eyes."
"People have been saying there’s been a bond bubble since the back end of 2008, and look what’s happened since."
"I think intermediaries have gone a little overboard by projecting that hundreds of thousands of pounds are going to be wiped off pensions. It’s all hype."
Dampier says any significant move in bond yields will just be seen as a buying opportunity for investors looking to prop up their income.
"The yield on 10-year gilts is at 1.7 per cent. Let’s say they backed up to 4 per cent – at this point they look attractive again because cash is yielding so little, so you’ll just see them come in again."
"Until interest rates move, I don’t think you’re going to see any major movements. Maybe if the Fed moves to up interest rates that could have a knock-on effect, but it would have to be something pretty major."
Dampier is the second industry commentator to rubbish the bond-bubble argument in the space of a week. Mark Holman, partner at TwentyFour Asset Management, told FE Trustnet last week that the whole concept of there being a bubble in bonds is farcical.
Dampier adds that any significant correction in bonds will probably go hand-in-hand with a significant correction in equities, and so he questions the logic of equity managers using the bond bubble argument as a reason to buy risk assets.
"If interest rates do go up and bonds fall, you wouldn’t want to be in equities either," he said. "Equities like rising rates about as much as bonds, which you saw in 1994 when they both tanked."
Performance of indices and sectors 1993 to 1995
Source: FE Analytics
He is also wary of the term "great rotation" with regard to the supposed exodus from bonds into equities, believing once again it is little more than hype.
"There’s been money going out of cash, but not out of bonds," he said.
According to the latest IMA sales figures, IMA Sterling Strategic Bond was the bestselling sector in March.
Dampier says he has recently been adding to his own position in the five crown-rated Royal London Sterling Extra Yield portfolio.
"I’ve added a bit more in to my SIPP recently – I’ve got about 9 to 10 per cent in the fund now," he said.
"I’m sure there will be a time to sell out of it, but at the moment I’m not buying into the argument that you should be ditching all your bond exposure."
Eric Holt’s £707m Royal London Sterling Extra Yield fund is a top quartile performer in its IMA Sterling Strategic Bond sector over one and three years.
It had a disastrous 2008, when it lost 33.38 per cent – more than the FTSE All Share. As a result, it is only second quartile over five years.
Performance of fund vs sector over 5yrs
Source: FE Analytics
The fund is currently yielding 6.4 per cent, a figure beaten by only four of its rivals in IMA Sterling Strategic Bond.
Royal London Sterling Extra Yield requires a minimum investment of £1,000 and has an ongoing charges fee (OCF) of 1.38 per cent.