Financial markets are pricing in the predictable positive global reflation trade effects.
For European investors, however, the road ahead remains rocky as political risks show few signs of abating. Against this backdrop, corporate bonds may provide a buffer against these headwinds. A valuable ballast to riskier assets, they provide impressive risk/reward benefits. At Generali Investments, we believe that increasing duration or moving sharply down the rating spectrum will no longer be effective as those solutions will com- promise the robustness of the portfolio in the long run, exposing it to unwanted tail risk.
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