M&G multi-asset manager: The asset classes looking the most vulnerable in the current climate

Investors' aversion to anything seen as 'risky' has driven down bond yields to levels which could actually suggest complacency with regards to the riskiness of many government bonds, writes Tony Finding, multi-asset manager at M&G Investments.

Even without a return of interest rates to the pre-crisis levels, the vulnerability of these assets to changing policy dynamics, a rise in inflation, or even a simple change in investor sentiment may seem significant. In the absence of severe deflation, the best outcome for a buy and hold investor of government bonds seems very poor. The bull case for backing equity markets versus areas of fixed income is therefore predicated on value alone. Convertible bonds: The most attractive entry point since summer 2013? Pricing suggests this strategy should win even without economics and ...