Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies Sponsored Posts etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites. Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. A very few articles on our website are sponsored posts or paid advertorials. These are marked as sponsored posts at the bottom of each post. For avoidance of any doubts and to make it easier for you to differentiate sponsored or non-sponsored articles or links, you may consider all articles on our site or all links to external websites as sponsored . Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.


  • Large parts of the government bond markets are yielding less than zero
  • Bonds providing sensible income levels rather than capital gain
  • Opting for short-dated, good quality US and UK corporate debt

Anthony Rayner, manager of Miton’s multi-asset fund range, comments: 

“Some passive equity investors will be comforted, rightly or wrongly, by the fact that their largest holdings are in such big businesses as the likes of Apple,  assuming safety and strength in size. However, with bond indices, the largest holdings tend to be the largest debtors. As a result, the more indebted companies, or governments, get more attention than their thriftier counterparts.

“Another reason to be cautious about buying bond indices is that large parts of the government bond markets are yielding less than zero, and this is before we factor in the impact of inflation on returns. For the Eurozone and Japan for example, anything below a seven-year tenor has a negative yield to maturity. For Japan, the 30-year tenor yields only 0.8%: quite a lot of interest rate risk for such a paltry return.

“With official rates globally on the slide for a few decades now, taking interest rate risk has been a one-way trade, and a very beneficial one, whether for passive investors or active managers, like us, that pushed out their duration to take advantage of the powerful trend for lower yields. Importantly, the dynamics of lower and lower rates over time have encouraged the duration of indices to become longer and longer, which potentially adds another sting in the tail for passive bond investors, as and when rates rise. Indeed, the Fed is setting the pace, with three rate rises this year, and expectations for more in 2018.

“As outcome-driven multi asset managers, we currently view bonds as a way of generating a sensible level of income, rather than providing capital gain (as they have done in recent decades), while their ability to act as a ballast to equity risk in portfolios is also limited by their very compressed yield. As a result, we have nothing in Japanese debt and nothing in Eurozone government debt. Instead our preference is for short-dated, good quality US and UK corporate debt.

“Our job is to think outside the bond box, rather than be chained to, or even constrained by, the anatomy of an index.”