Despite all the geopolitical and economic headwinds coming out of Europe these days it really seems as though global equity markets may have found some strong support.
The question that remains, what about bonds? A favourite for investors for many years running now, Fixed Income has out-paced traditional equities for several years running.
According to John Stopford at Investec that does not mean bond markets are trouble free.
Both fixed income in the European periphery and North America may be considered either too risky or just too rich, and low yielding, for the retail investor according to Stopford.
Investec’s co-head of Fixed Income, Stopford believes sophisticated investors may look to hedge their Euro-Bonds with Euro FX shorts or hedge with commodity currency shorts in places such as Canada or Australia.
Other than completely hedging your portfolio( with speculative hedges), Mr. Stopford notes the performance in Emerging market Fixed Income. He notes both locally denominated FI Markets, lovingly named Local Fixed Income, or in Hard Currency terms namely External Fixed Income( Emerging market and EM Corporate bonds denominated in the US Dollar) may very well continue to prove their outright resilience to any major headwinds.