Chatfeild-Roberts: Beware government bonds

Government bonds are unlikely to deliver strong returns in a low interest rate environment going into next year, warns Jupiter CIO John Chatfeild-Roberts.

The manager of the group's Merlin multi-manager range says while the asset class has attracted significant inflows this year, income investors face difficult choices in 2011 as interest rates are likely to remain low and the potential for bonds to produce further gains looks limited. Chatfeild-Roberts says: "It has been another strong year for bond investors but the risks associated with holding these assets are increasing. Government debt looks particularly vulnerable with the yield on US treasuries blowing out from 2.51% to 3.28% last week on the back of a new stimulus package aimed at...