Deep Dive: Multi-asset managers split on benefits of US Treasuries

Some opting for 'better' European options

Multi-asset managers are divided on whether US Treasuries remain the first port of call for sovereign bonds, with some opting for European fixed income, arguing the lack of urgency to increase household spending in the US makes other options more appealing.

The Treasury market has historically played an important role in multi-asset portfolios as a diversifier to equities over and above its fundamental return prospects. "With listed equities providing the main growth engine, any asset with a good track record of hedging stock market downturns merits special attention," argued Sunil Krishnan, head of multi-asset funds at Aviva Investors.  However, he noted that "US sovereigns struggled alongside other bonds in the reflation of 2021-3, even during flight-to-safety periods such as Q1 2022". Deep Dive: Copper supply squeeze offers potenti...