Investors risk falling into liquidity traps as they seek to boost yields depressed by the European Central Bank’s 1.1 trillion euro ($1.2 trillion) bond-buying program, according to Pacific Investment Management Co.

The search for yield has caused investors to buy riskier and less frequently traded bonds, which may be hard to sell quickly, said Mike Amey, a London-based fund manager at Pimco, which oversees about $1.59 trillion of assets. Overall bond trading has slumped since the global financial crisis because banks have cut inventories to preserve capital in response to tighter regulations.

“If you want to find some yield-enhancing assets, then make sure you’re paid for tighter liquidity,” said Amey, a speaker at Euromoney’s Global Borrowers & Investors Forum in London, which starts Tuesday. “If you’re going to take a liquidity premium, be prepared to hold the asset for years.”

One measure of bond-market liquidity is down 10 percent in the past year and 90 percent since 2006, Royal Bank of Scotland Group Plc said in March. In the U.S., less than 5 percent of the market changes hands each month, down from about 20 percent in 2007, according to a November report by the Bank for International Settlements.

‘Biggest Worry’

“My biggest worry for the market going forward is liquidity,” said Kris Kowal, managing director of fixed income at DuPont Capital Management, which oversees $30.8 billion of assets. Investors are “trading illiquidity for a bit more yield, and I don’t think that’s the right approach at this stage in Europe’s economic cycle.”

Structured securities and loans are among the most illiquid assets, said Wilmington, Delaware-based Kowal, who is also speaking at the Euromoney conference. Investors who need liquidity should hold cash or highly traded government bonds, Amey said.

The ECB’s quantitative easing will continue to provide liquidity for the time being, said David Zahn, head of European fixed income at Franklin Templeton Investments, which manages about $890 billion of assets. Still, he is ensuring that his funds have enough liquidity to meet redemptions and to act on new opportunities.

“We keep a good amount of our portfolios in relatively low-yielding, boring bonds because they are very liquid,” said Zahn, another speaker at the Euromoney conference. “We’re very cognizant that some areas of the markets are not as liquid as they were before the crisis.”

Average yields on investment-grade company bonds fell to a record 0.85 percent in March, based on Bank of America Merrill Lynch index data. They have since risen to 1.41 percent. Junk-bond yields dropped to an eight-month low of 3.55 percent in February, and are now 4.46 percent.