With concerns over global trade, Brexit and the inverted bond yield curve, the old market adage of ‘investments climbing a wall of worry’ is getting short of available space.
As short-dated bond strategies trade at volatility levels comparable with money market funds, we believe investors should consider those strategies with a bit of caution.
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Before investing in these funds, investors must view credit risk positively (is there an imminent recession?) as well as credit valuations – the short-dated bond strategy will not fully hedge investors against downside risks.
Charles Younes is research manager at FE
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