A Diversified Portfolio May Not Help Investors Much This Year
JPMorgan's Nandini Ramakrishnan Discusses the Correlation Between Bonds and Equities
This article is for subscribers only.
The economy has changed and investors can no longer rely on a diversified stock-bond portfolio to provide protection in times of market volatility, according to JPMorgan Asset Management.
Rising inflation expectations and the knock-on effect of higher yields are acting to prevent bonds from rallying in risk-off environments, global strategist Thushka Maharaj wrote in a recent note to clients. In such a reflationary environment, the correlation between stocks and bonds is likely to go up, reducing the diversification benefits for investors holding both assets, she said.