The place of bonds in a low yield world

With yields at low levels around the world, investors are questioning the practicality of bonds as a defense against equity declines. In this paper, The place of bonds in a low yield world, Dean Stewart, executive director of fixed income and currency, provides an empirical analysis showing that:

  • bonds still have a role to play in many portfolios, providing liquidity and drawdown protection.
  • on a risk-adjusted basis, diversified portfolios of bonds and stocks have continued to outperform equity indices during recent years.
  • correlations between stocks and bonds are important to keep in mind, particularly as the global economy nudges ever closer toward higher interest rates, faster economic growth, and a rise in inflation.
Read the paper

The views expressed represent the Manager's assessment of the market environment as of February 2018, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Views are subject to change without notice and may not reflect the Manager's views.


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