Government bonds are often referred to as risk-free or safe-haven assets, and, in the right context, this is a correct label as they are low volatility investments that represent money lent to a sovereign nation with almost no risk of default. However, in the first half of 2022, a diversified portfolio of global government bonds returned -13.3% in CAD terms. So, how do we reconcile an outcome like this with the near-risk-free or safe-haven aspect of the asset class?
Tag: Fixed Income
Why You Should Hold Bonds
The most recent pullback in equity prices due to uncertainty around COVID-19 has resulted in another leg lower for bond yields as investors clambered to gain exposure to the safety of fixed income products. The steady march lower in yields is once again prompting market participants to question how much lower yields can go, and…
Diversification Performance Through the Panic
If you have been following financial markets, even casually since February, you would know that we are in the midst of one of the fastest and sharpest equity market drawdowns in history. Although it may feel like the financial world is on the brink of collapse, a recent article by Ben Carlson of A Wealth…
Why Bonds Should Be a Staple, No Matter Your Portfolio
With the recent volatility in financial markets, some investors are finally seeing the diversification benefit of holding fixed income in their portfolios alongside their riskier equity investments. In the current bull market – the longest one in history – it is easy to look at the allocation to bonds as nothing more than a drag…