June 2011. The bond world has been turned upside down. Developed world government bonds, for so long the staples of most bond portfolios, appear to offer little long-term value at current levels, under pressure from high inflation and rising interest rate expectations. In contrast, emerging market debt and high yield bonds, which have traditionally played a more marginal role in most portfolios, are increasingly providing the driving force behind bond returns.
The bond world has been turned upside down. Developed world government bonds, for so long the staples of most bond portfolios, appear to offer little long-term value at current levels, under pressure from high inflation and rising interest rate expectations. In contrast, emerging market debt and high yield bonds, which have traditionally played a more marginal role in most portfolios, are increasingly providing the driving force behind bond returns. (Read more)
