Bonds No Longer Provide Diversification In NIRP World: Morgan Stanley

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Mani
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Bond yields

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 for the last 25 years. In fact, bonds have ticked many of the…

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports