David McLeish – Senior Portfolio Manager — Fixed Interest – 20 November, 2019

Last month we explored the not so ‘bubbliciousness’ of bonds – and found no clear evidence that the asset class was a bubble.  Nevertheless, in a world of low interest rates, the question remains: does fixed income still have a role to play in my investment portfolio?

Your financial umbrella

Fixed income has long provided diversification, stability, and income to an investment portfolio.  This article explains why, despite the low interest rate environment, fixed income still has an important role to play in meeting your investment goals and smoothing out the journey.

A vital ballast in your investment portfolio

If share markets always rose then there would be little reason to bother with fixed income.  The reality is though, they don’t.  It is therefore important to have investments in your portfolio that provide an offset in times of turbulence.  It is for this reason most diversified or balanced portfolios include growth assets, such as shares and property, as well as defensive assets, such as fixed income.

However, in this low interest rate world, many are rightfully asking; can defensive assets can still provide this valuable ballast to growth assets?