Why bond investors need to ‘think global'

FIXED INCOME

Iain Stealey and Nick Gartside, managers of the JPM Strategic Bond fund, present the case for widening the scope of fixed income investing.

In the past, UK investors may have been well served by holding a gilt fund. Five or so years ago, UK gilts were yielding around 5%, inflation was 2%, and the UK’s debt-to-GDP ratio was 40%. In that kind of an environment, buying gilts was a pretty decent investment: you got a 3% real return from a portfolio of assets that you could essentially buy and hold to maturity. A 30-year bull market In essence, we have been in a fixed income bull market for the past 30 years. Central banks have had a mandate to target inflation, and in a low inflation environment, a creditworthy government does...