Sovereign 10-year bond yields:

US 0.70%

Bunds -0.413%

Japan 0.049%

UK 0.245%

France -0.124%

As you can see from the above, sovereign bond yields are at historic low levels making it extremely difficult for so called safe haven bond funds to make positive returns when charges and inflation are taken into consideration. In the current environment, it is important that investors construct investment portfolios that invest in bonds that have higher yields or funds that have lower charges. In accessing higher yields, investors will be investing in sovereign or corporate debt with lower credit ratings than seen above.

BAM has little exposure to safe haven bonds, concentrating on portfolio managers who invest in credit, normally corporate debt that are able to show positive returns in the current climate. However, this is by no means risk free with lesser credit having a higher the risk of default.

SOURCE: – 16/08/2020