The annual forum for investment, finance, treasury and actuarial executives to discuss portfolio and ALM strategies impacting insurance funds.

Bonds have had an amazing bull run over the last 40 years, fuelled by falling interest rates and inflation. With inflationary pressures and tightening of monetary policies in the near horizon, have bonds fallen out of favour? Is there still a role for fixed income in investors’ portfolios?

As investors anticipate a world of lower expected return, heightened inflation, increased conflict and undue government interference, it is imperative to question whether traditional capital market assumptions and models continue to hold true. Like the wombat with its reinforced rump, what protection levers are available for deployment in a portfolio?

The negative correlation between equities and bonds, which has served 60/40 portfolios so well for the past decade, is now questionable. The new investment regime, exacerbated by the pandemic, has somewhat diminished the defensive role of bonds. Is there an alternative to bonds, or so-called bond-substitutes?

Strictly speaking the pandemic might not be a black swan, but it certainly has many characteristics of it from an equity investor perspective