Risk assets performed well during the first quarter of 2012.

ON BONDS

Risk assets performed well during the first quarter of 2012.

Investment grade debt is arguably at the lighter end of the risk spectrum, however bonds issued by higher quality companies still delivered strong returns. I see three reasons for this. Importantly, it appears these factors remain in place, supporting prices in coming months: Toward the end of 2011 investors hoarded cash. I spoke to clients running 25% or more cash. Money earmarked for investment grade or high yield was parked in bank accounts or government debt until greater eurozone certainty emerged. Since November the European Central Bank has acted more like a “lender of last res...