As we begin a new year, arguably the biggest asset allocation conundrum for investors is how to tackle fixed income.
Many commentators believe we have embarked on the latest iteration of ‘the great rotation’ away from bonds, while monetary policy tightening in the US has begun after an unprecedented period of sustained rock-bottom rates.
Then there is the fact that president-elect Trump is about to take up his position in the Oval Office, having made inflation-stoking promises of ‘big league’ tax cuts and infrastructure spending initiatives.
Money managers are already paring back fixed-income holdings, with government bonds particularly in the firing line.
Despite this situation, fixed income will still form a significant part of most portfolios, so how can investors position themselves to make money and, perhaps more importantly, avoid losing it?
