This is in contrast to views held by Kipp Cummins, a senior portfolio manager at institutional asset manager Dimensional, who said there is still an important place for fixed income investments in investors’ portfolios.
Cummins told FTAdviser that investors would be forgiven for asking why they should be holding fixed income assets in their portfolios in the current low interest-rate environment.
He explained there were two reasons the exposure was justified.
The first is that the level of yield is not the only story. “An expected return is made up of two main things: one is the yield and the other is the shape of the yield curve,” he said.
The second reason is that just because yields are low, it does not mean expected returns must also be low or zero.
“The trick is to find those [profitable] areas of the market," he said.
He added those areas currently included Australia, New Zealand, the US, Canada and Norway.
sally.hickey@ft.com
