Wall Street Frets Over Investing 101 as Hedging Gets Dangerous
- With yields already near zero, bonds seen as unreliable hedge
- Investors tout gold, private markets, hedge fund strategies
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There are lots of reasons to hate the stock rally, but one looks more menacing by the day: Investors have few tried-and-tested hedges for its collapse.
As fixed income and equities move closer together and yields fall back toward historic lows, faith in the hedging magic of government bonds is vanishing. Big-name investors like Man Group Plc’s Chief Executive Officer Luke Ellis warn the rationale of simply owning sovereign debt as a long-term investment with a nice yield no longer applies.