5 Themes for Bond Investing

Fixed income exposure is essential for a properly balanced investment portfolio. So what are the current challenges and opportunities in the bond market?

Fidelity International 9 April, 2014 | 10:00AM
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This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Fidelity’s Ian Spreadbury reveals his five fixed income themes.

1 – Core government bond yields are unlikely to rise

Nominal GDP is a simple proxy for Gilt yields, with Gilt yields tending to be about 0.5 to 0.75% below nominal GDP. With nominal GDP forecasts around 4.6% for 2014 and 2015 (2.4% real GDP + 2.2% inflation) – and even that seems high – there is little scope for significant yield increases. With inflation more likely to surprise on the downside than the upside, the possibility of yields falling as they have recently remains very real.

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Fidelity International

Fidelity International  

is a global leader in asset management, providing investment products and services to individuals and institutions in the UK, continental Europe, the Middle East and Asia Pacific.