How to make diversification work with equities and bonds

  • To list the challenges with creating robust portfolios during difficult market conditions
  • To summarise the importance of diversification with a long-term strategic plan
  • To explain how bonds, equities and other asset classes work together in portfolios
  • To list the challenges with creating robust portfolios during difficult market conditions
  • To summarise the importance of diversification with a long-term strategic plan
  • To explain how bonds, equities and other asset classes work together in portfolios
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T Rowe Price
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CPD
Approx.30min
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CPD
Approx.30min
Supported by
T Rowe Price
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Supported by
T Rowe Price
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CPD
Approx.30min
How to make diversification work with equities and bonds
Creating the right portfolio mix is vital
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Inflation has had a lasting effect on many economies across the globe, leaving savers and borrowers alike scratching their heads to work out what the best next step might be.

Just a year ago, people were asking the question, 'Is the 60:40 portfolio dead?'.

But with inflation soaring, and central banks working hard to keep inflation in check through raising rates, yields on bonds have become very attractive.

But how should clients' portfolios be structured to take advantage of both equities and bonds? 

True, every client is different and bespoke approaches and regular reviews should be carried out to make sure clients' investments remain on track.

But what sensible strategies can be put in place now to help clients make the most of both equities and bonds, and what sort of diversification methods ought to be employed on portfolios?

This CPD feature, which can be read by clicking the link in the image, above, aims to explain some useful rules of thumb to put in place when it comes to diversification and understanding the role that both fixed income and equities play within a portfolio. 

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 Morningstar, what had its worst year in 2022?
  2. What is back, according to Hibbert?
  3. What does Cook say investors tend to do a lot of?
  4. Klempster says the highest quality government bonds will look least like what over the long term?
  5. Jameson says 2024 is likely to be a year where investors will need to be what?
  6. According to Khalaf, in times of extreme market stress, what happens to the correlation of almost all assets?
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