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Should you get out of bonds?
More money came out of bond mutual funds than went in in the
second quarter. That hasn’t happened since 2008. So if everyone else appears to
be heading for the fixed income exit, shouldn't you be fighting to get out too?
It all depends on timing, according to Nick Beecroft, the
Chairman of Saxo Capital Markets. Over the longer term, he says, the mathematics
should rescue you. If you hold a ten
year gilt then you’ll get that back after a decade along with the coupon. But
he says it’s entirely possible you could lose money over the next year, that’s
including the coupon. And that’s more so in the US where Nick says it’s possible
you could lost 5% over the next twelve months in ten year treasuries.
Pimco’s Bill Gross, has said no one should panic. But,
seeing as he manages the world’s biggest bond fund, he would say that wouldn’t
he?
01:10 minutes
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