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The Optimisation Conundrum

Wednesday, November 11, 2020

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 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 Investment Week Article

Read the G10 Strategy Info Sheet

IMPORTANT INFORMATION: Issued and approved by Pacific Capital Partners Limited, a limited company registered in England and Wales, authorised and regulated by the Financial Conduct Authority . The information contained herein is not approved for use by the public and is only intended for recipients who would be generally classified as investment professionals. Information or opinions contained in this article do not constitute an offer to sell or a solicitation, or offer to buy, any securities or financial instruments or investment advice or any advice or recommendation.

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