Should You Lock into Negative Returns?

With so much uncertainty in global markets, many investors are willing to accept a loss on their money. What are the alternatives for those who want a real return?

Holly Black 13 November, 2019 | 9:10AM

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Bonds are an income investment, the clue is in the name: fixed income. But some bonds are asking investors to lock into a loss – negative yields on offer from some government bonds mean you are effectively paying to invest.

Across the Eurozone, negative yields are becoming increasingly common. Bonds issued by the German, Swiss and Danish governments all offer negative returns. Even in other markets, such as the UK, where the headline yield on offer is still in positive territory, investors are still locking into a negative real yield once you take inflation into account.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Investec Global Total Ret Crdt K GBP Acc0.95 GBP0.23
Man GLG Strategic Bond Retail Acc A123.40 GBP-0.08

About Author

Holly Black  is Senior Editor, Morningstar.co.uk

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