Falling rates in recent years have caused a major shift in sentiment to the point that financial advisers are looking after portfolios that are 'underweight' fixed income due to individual client preferences.
But is this decision beneficial for their clients in the long-term? This edition features a Q&A that can help advisers add value by providing what is, on the surface, a counter-intuitive response to the consensus outlook on bond markets.
In the Q&A, Nikko Asset Management Australia's head of fixed income James Alexander explains why he does not foresee a 'bond bubble' bursting and why being 'underweight' in fixed income might make sense in the short-term but can hold an investor back over the long-term.
Ultimately, financial advisers need to look at overall portfolio risk alongside their clients' expectations on returns - and that's when an allocation to fixed income can help to diversify that risk and reduce volatility.
You can read more about this in their recent article titled 'Risk management: The role of fixed income' featured in the latest issue of Financial Standard.