Be fearful of high-risk bond markets

ON ASSET ALLOCATION

Integral's Hywel George explains why bonds are now a high-risk investment.

It is time to be fearful of bonds and greedy of equity. In this sense the traditional ‘cautious’ and ‘aggressive’ strategic allocations need to be relabelled, in that cautious is now high risk and aggressive, low risk. It is clear we are coming to the end of a 20-year bull run in bond markets. In simple terms there is only so low a yield can go. The Western world has benefitted from imported deflation from cheap Asian labour, a trend that is showing signs of reversing. The legacy of QE I and II will be higher levels of inflation for a decade to come. Bonds are now a high-risk investment....