Six investors on the safety status of govvies

Victoria Hasler, head of research, Square Mile

“Traditionally, government bonds have exhibited low correlation with equities and provided diversification and protection in times of falling markets. The real question now is whether correlations between government bonds and equities will remain low in the next equity market fall with bond yields at such low levels.

“We have observed several incidents of high correlation on market dips in the last few years. However, it is by no means certain that this would persist in a severe and prolonged equity market sell off. Wise investors know all too well that just because something is expensive does not mean it cannot get more so. Is this time different? I doubt it.”