Gill Hutchison: Bonds - Friend or foe?

It has been a golden age for fixed income investments. ‘The Great Moderation', falling interest rates, muted inflation and quantitative easing have all proved great friends to holders of bonds. The 10-year Gilt yield reached a high of 16% in 1981 and fell to a low of 0.5% in 2016. Years before that nadir, however, investors were beginning to fret about the prospects for bonds and looking for alternatives, fearful of negative returns from an asset class that had been so good for them. Turning away from gilts and bond duration too early proved to be a relatively painful trade.  Although...