Deep Dive: Fixed income is a crucial element in a portfolio

Yield-to-maturity is often overused

clock • 3 min read
Helen Bradshaw of Quilter Investors
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Helen Bradshaw of Quilter Investors

Helen Bradshaw, income portfolio manager at Quilter Investors, dives into fixed income.

Why bother with bonds? Everyone has heard the litany of reasons not to hold bonds. These can normally be summarised into three points: (1) No, or negative, yield; (2) no potential for price gains; (3) significant potential for price falls. We think there is a lot more to it though and will not be jettisoning any bond exposure just yet. Who wants a negative yielding bond? Yield-to-maturity (YTM) is often overused as a return estimator given few bond managers hold bonds to maturity. Excessive focus on YTM ignores the steepness of the yield curve as a driver of shorter-term returns. By ca...

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