J.P. Morgan AM: Bonds now offer better income and diversification

J.P. Morgan AM: Bonds now offer better income and diversification

December 13, 2022

Asset Allocation Fixed Income
Obligaties (03)

Allocating to fixed income has been a source of headaches in recent times. A long bull market meant that at one point, 90% of the global government bond universe was offering a yield of less than 1%. Low starting yields also reduced the ability of government bonds to provide diversification in an economic downturn.

2022 has seen a large drawdown in fixed income thanks to surging inflation and rising rates. However, whilst this correction was painful, the income on offer from bonds is now much more attractive. Bonds also now offer better potential diversification - any further downside in stock markets could be cushioned by fixed income returns if yields came down from current levels. Thus, the ability for investors to build diversified portfolios using fixed income has improved since the start of the year.

13122022 J.P. Morgan AM

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