Summary
- Bonds have acted as a very strong hedge against periods of market stresses in the past 50 years.
- However, with interest rates trading at 0 percent in most economies, the upside in bonds remains very limited.
- It is time to diversify your 60/40 equity bond portfolio as correlation between stocks and bonds may switch back to positive if inflation rises in MT.
Add some gold in your portfolio as it offers similar characteristics than bonds with ‘unlimited' upside.
Source: The Future Of The 60/40 Equity Bond Allocation (And Risk Parity)