Should You Still Invest in Bonds?

We know that lower returns are expected from bonds in the future and the sensitivity to interest rates is higher

Mark Preskett 1 November, 2017 | 9:34AM Tanguy De Lauzon

Fixed-income markets have enjoyed one of the greatest 30- to 40-year bull markets in history. With 10-year government bond yields falling from highs of over 15% in the early 1980s to lows of 2% today, the asset class has delivered unprecedented returns for cautiously-minded investors.

The theory is that when stocks go up, bonds go down; and vice versa

At this juncture, it is therefore healthy to remind ourselves of the two key roles lower-risk bonds play in a portfolio: 1) as a source of return, and 2) to diversify equity risk. But these two roles are impacted by the current market framework.

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About Author

Mark Preskett  is a Senior Investment Consultant & Portfolio Manager for Morningstar UK                       

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