The strategic case for global fixed income rests on diversification. With the global bond asset class encompassing a wide range of countries, it provides opportunities for diversification versus domestic bond portfolios, and the characteristics of global bonds also provide excellent diversification against riskier asset classes such as equities and high yield credit.
In the short-term, global bonds have outperformed during periods of market turmoil. As a result, they can help stabilize portfolios during times of crises. By their very nature, market crises are unpredictable and will always occur. Global bonds therefore should act like an insurance policy – helping to cushion against losses in riskier asset classes such as equities.
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