Square Mile's Angell: The 'sleeping giant' in bond portfolios

'Eye-watering valuations'

A 'sleeping giant' of many advisor portfolios may well be duration. That bonds act as ballast to portfolios has been accepted logic for many years.

When the economy weakens, corporate profits fall and therefore equities do too; however, at the other end of investor portfolios bonds strengthen, or so the logic goes, as fixed income streams become more attractive during times of economic uncertainty. This relationship is under pressure, predominantly due to the eye-watering valuations both bonds and equities are trading at compared to longer-term averages. Liontrust's Roberts: Why I remain bearish on gilts (despite supportive data) The long-term average yield of an index of UK government bonds stood at 4.8% per annum in the deca...