Short duration portfolios are key

Global government bonds start 2004 as one of the least favoured asset classes worldwide. Surveys of bond fund managers start the year showing that the predominant position is to hold short duration portfolios - for instance, most fund managers are expecting yields to rise. It is easy to see why. Nominal yields are low, the global economy is recovering fast, there is speculation over rising interest rates and public sector deficits are rising. For the first time in several years there is an air of optimism surrounding higher beta asset classes (such as equity markets) as the repercussions...