The Optimisation Conundrum: Assessing the role of bonds within traditional investment funds by the Pacific G10 Macro Rates Team.
The Pacific G10 Macro Rates team spoke to Investment Week on a paper they have recently written which assesses the role of bonds within traditional investment funds.
Bonds historically used to provide a real return on investment, and a positive volatility bias - generally rallying when market volatility picked up. However, yields on government bonds are now at multi-decade lows and there is debate over whether the asset class can provide either returns, or perhaps more importantly, risk reduction. This lack of risk reduction has implications for portfolio construction, as bonds at these yields become vulnerable to competition from other assets, including non-interest-bearing products such as gold.
The paper investigates those risks and finds that the correlations of most assets classes cluster together when calculated against core bond duration and equity markets, with very few sectors providing genuine diversification.
Read the complete paper in the Investment Week article by clicking below or please email firstname.lastname@example.org us if you would like to be sent a copy.
For further information on the Pacific G10 Macro Rates team, their experience and strategy please see below
Read the G10 Strategy Info Sheet
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