Four charts that sum up the bond challenge
By International Adviser, 29 Oct 15
A great deal has already been written about the challenges facing asset allocators in a world where bonds yields have been pushing lower for the better part of 30 years.
Traditionally, an easy way to boost portfolio yield while adding minimal risk, was to add exposure to investment grade corporate bonds, Stevens said.
But, he added: “Using the Barclays indices as an example, we see that this option is now relatively unappealing to investors as US corporate bonds only yield around 3% with European corporate bonds yielding just half of that at 1.5%. Both these yields are low compared to historical averages of around 5% for the asset class in the US and around 4% for the same in Europe.”
The implication of this is that simple directional trades are not sufficient to generate performance on their own