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The absolute return answer to interest-rate risk
Central bank rates could bounce off the bottom this year amid a firming global recovery and as monetary policy normalises. Guy Williams, FFTW* chief investment officer, and Alex Johnson, co-head of global fixed income at FFTW, argue that investors should nevertheless maintain a foothold in bonds for their consistent returns and diversification and capital preservation characteristics, ideally through a strategy targeting absolute returns.
Divergence will be a major theme in 2015. The growth and inflation outlooks differ widely across the developed and developing worlds, and this will be reflected in central bank policy. We also see an increasing emphasis on idiosyncratic risk. Discrepancies should...
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