Big downward moves in bond yields aren’t imminent but there is scope for lower yields further out, with higher volatility along the way, Hargreaves Lansdown said.
“Investors should not be put off by this outlook–we think this could be the most interesting entry point for bond investors in decades.”
There is potential that investors could be rewarded either with income from higher-for-longer yields, or growth, as yields fall, Hargreaves said.
“Volatility is hard to stomach but can offer opportunities for good quality active fund managers to take advantage of price fluctuations.”
Lazard Asset Management Germany said the earnings power of bonds has been restored in both the eurozone and the U.S. and clearly exceeds the dividend yield of a global equity portfolio, with calculable risk.
Bonds again fulfill criteria that a basic investment must meet in asset allocation, such as calculable and secure returns, continuous liquidity and serving to diversify with a low correlation to risky assets, it said.
“We are experiencing a renaissance of this asset class.”