What now for low-risk portfolios?

• The past 18 months has been challenging for investors in ‘lower-risk’ portfolios across the industry. Such investors typically had larger proportions allocated to bonds and have therefore been impacted by the notable sell-off we have seen in the bond market following higher inflation and increasing interest rates.
• Looking-forward, bonds are now more attractively valued than at any point in the last 15 years. Short-dated bonds were yielding over 5% this July.
• We believe bonds should form a cornerstone element of a lower risk portfolio. The current high level of yields gives us the opportunity to generate reasonable returns while at the same time managing the downside risks associated with other more growth-based asset classes.

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