Darius McDermott: Three reasons not to own a bond tracker in 2017

Bond outlook finally looks to be changing

clock • 3 min read

Bond exchange-traded funds may have been capturing an increasing share of the market but this year, says Darius McDermott, there are three good reasons why investors might prefer to steer clear of bond trackers

When bond managers are telling you there is a reasonable chance you will lose money if you invest in the bond index in 2017, it is a pretty clear sign the bull market of 30-plus years is coming to an end. Rising interest rates and inflation were always going to spell trouble for the asset class, but various global events have kept these catalysts at bay for longer than many expected. This year, however, the outlook appears to be changing. Central bank policies around the world will diverge yet, overall, we may finally be at the beginning of a new cycle. Monetary policy in certain regions...

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