Matt Bance, strategist on the UBS Multi-Asset Income fund, explains the hidden risks of fixed income allocations in multi-asset portfolios...
Government bonds are the safest asset class, right? Any risk model used to determine your portfolio’s strategic allocation will likely tell you that an allocation to government bonds is the best thing to do if you want to reduce risk. This will likely be based upon the annualised volatility of monthly returns and low levels of correlation with “riskier” assets going back over the past 30 years or so. What it will not tell you, however, is that this coincides with a period in which the UK 10-year government bond yield has fallen from around 16% to around the 2% level prevailing toda...
To continue reading this article...
Join Professional Adviser for free
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes