Talking Point 

How bonds and equities are defying their conventional relationship

  • List what the typical defensive portfolio will look like
  • Describe what investing in a multi-asset portfolio entails
  • Explain the risks and benefits of absolute-return funds
CPD
Approx.30min
How to invest in the current climate
What can advisers do to help clients understand the current relationship between equities and bonds?
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Bonds have traditionally been perceived as one of the “safest haven” assets by investors during times of geopolitical turmoil. 

This is largely due to the fact that bonds and equities have typically shared a negative correlation, that is, when one goes up and the other goes down. 

But 2018 proved to be a tumultuous year for several assets, and this relationship began to fade, with both of them moving in the same direction. 

This was a result of central banking activity across the globe, and depressed macroeconomic conditions. 

Despite this, equities are believed to outperform cash and bonds in the coming years according to commentators. 

For advisers this is a time not only to reassure clients but also to reassess what the best strategy may be for their clients to achieve defensive exposure, and diversify their portfolios. 
Talking Point, in association with Schroders, considers how advisers can help investors seeking defensive exposure. 

The report, which can be read by clicking the link in the image above, qualifies for an indicative 30 minutes' worth of CPD. 

saloni.sardana@ft.com 

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. According to Mr Krishnan, why have equities and bonds risen in the same direction in recent years?

  2. According to data from the Investment Association, how much did investors withdraw from the absolute return class?

  3. Why should Eurozone shares be avoided according to Mr Krishnan?

  4. Why has Mr Krishan been recently investing in absolute return funds?

  5. Why do higher interest rates mean bond prices fall?

  6. How many times have US interest rates risen since 2015?

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You have successfully answered all the questions correctly, well done!

You should now know…

  • List what the typical defensive portfolio will look like
  • Describe what investing in a multi-asset portfolio entails
  • Explain the risks and benefits of absolute-return funds

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