The hunt for a guaranteed return

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Despite the claims of a ‘great rotation' from equities into bonds, both asset classes have recently seen good inflows, but record low interest rates have undoubtedly made things tough for bond managers, writes Torgeir Høien, portfolio manager at Skagen Tellus.

Since the financial crisis – the deepest economic recession the world has seen since the 1930s – many of the world’s investors have avoided risk. Yet remarkable things have happened along the way. For example, when the US national debt was downgraded in the summer of 2011 from its AAA-status, interest rates went down instead of up, which is not what you would have expected, and demand for US government bonds increased. Meanwhile, investors have, at times, been willing to pay interest instead of receive it through owning German government bonds. Interest rates Long-term interest r...