Stock concentration risks highlight need for diversity

GLOBAL INCOME

The UK market is as skewed and concentrated as ever in a small number of large names, but Ross Hollyman, fund manager at Sabre Fund Management, argues bigger returns with less risk are available globally.

With bond yields at such low levels – UK 10-year gilts are at 2.7% currently – they offer little protection against unanticipated future inflation. With the recent rapid acceleration in the housing market, it cannot be long before UK base rates edge up from historically low levels. While a flattening yield curve may offer some price protection to holders of longer dated instruments, it is difficult to see any value in bonds at these levels. Bonds offer certainty of money returns in the short term, but such security is illusory to (most) investors with longer-term ‘real’ liabilities. I...