Bonds No Longer Provide Diversification In NIRP World: Morgan Stanley – ValueWalk Premium
Bond yields

Bonds No Longer Provide Diversification In NIRP World: Morgan Stanley

Though bonds have been the portfolio diversifier of choice in the last 25 years, extreme valuations create a drag on portfolio returns in normal times and are a hurdle to decorrelation and hedging in bad times, notes Morgan Stanley. Andrew Sheets and colleagues explored new diversifiers in four broad categories in their July 7 research piece titled “The New Diversifiers."
With yields at record levels, can bonds still be an effective diversifier?
Sheets and team point out that bonds had been the go-to diversifier for 60/40 portfolios . . .

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