For John Husselbee, head of Liontrust’s multi-asset team, getting rid of all of one’s bond exposure would be a mistake, because they continue to be a good diversifying asset.
Speaking on the PA Podcast, he said, currently, going global with one’s bond allocations is the right thing to do. But, he added, if one does believe that regime change is coming, now might also be the time to relook at liquid alternatives.
The challenge with liquid alternatives, he explained is that most have very short-duration benchmarks and, as such, have struggled in an environment where long duration assets have outperformed.
“Going forward, if interest rates are rising, if yields are rising then surely short duration assets are a good thing. So, perhaps, with the bond bull market coming to an end, hedge funds and absolute return funds are going to benefit.”
