Harvesting bond returns as rates rise
The climate is changing for fixed income. Quantitative easing is winding down. Interest rates look ready to start reversing a generation of decline. On the face of it, this seems a difficult background for bonds and, indeed, has already contributed to market volatility. Yet we believe it will be hard to replace the diversification, liquidity and security of bonds. In fact, we believe demand will continue to grow as populations age and increasingly need retirement income.