Why striking the right balance in fixed income is not just about duration anymore

Scott Ingham, investment director at Heartwood Investment Management, looks at the optimal risk/return approach to investing in bonds at a time when yields are unsustainably low

Managing fixed income in the current low interest rate environment demands that preserving capital is just as important as seeking return. Over the past few years, investors could make attractive returns from investing in longer-duration assets as yield curves flattened. The term premium between the long- and short-dated sectors is less compelling now, and we believe there is less value to be found by simply taking duration exposure alone. UK to issue 30-year inflation-linked bond To put simply, if we were to see a rise in yields of 100 basis points across the UK gilt curve, then t...