Bonds
Financial repression has reduced bond yields to historically low levels. With roughly 40 per cent of government bonds and 16 per cent of global bonds, including corporates, having negative yields, we see better opportunities in alternative asset classes, such as infrastructure and renewable-energy assets, which are beneficiaries of government subsidies yet can, potentially, provide three times the return. We are negative overall, but overweight Australia and New Zealand, which would benefit from a Chinese ‘hard landing’.
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