Four routes for bond investors

BONDS

Tim Haywood, business unit head for fixed income at GAM, looks at how to navigate today's turbulent bond market conditions.

The clock is ticking for bond investors. The so-far successful long-only strategy of investing in top-quality sovereign bonds will not work so well going forward. Real yields, in many countries, are in negative territory and as soon as yields start to rise investors will face losses. If defaults occur, losses will hit portfolios even more quickly and devastatingly. When it comes to European sovereign debt, many bond investors seem to have taken fright, reducing or eliminating all such exposure from their portfolios. So what options are there for bond investors? Broadly, we see four po...