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WESTERN ASSET

Preview

Diversification as an investing principle never goes out of style. But in today’s low-rate environment, do bonds still provide effective diversification in a traditional asset allocation framework? Are the reasons for owning fixed-income the same as they have been in the past?

The short answer to both questions is a resounding “Yes.”

In this paper, we provide five reasons why we believe fixed-income should continue to be an important part of investors’ portfolios.

Key Takeaways

  • Fixed-income is the only asset class that demonstrates a low to negative correlation to risk assets.
  • Fixed-income provides highly efficient returns per unit of risk.
  • Fixed-income is an effective tool to manage drawdown risk.
  • A passive manager cannot express duration, curve, sector or security preferences in portfolio construction in the ways that an active manager can.

Read the full paper: HERE

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Issued by Legg Mason Asset Management Australia Limited (ABN 76 004 835 849 AFSL 240827) which is part of Franklin Resources, Inc. Any reference to ‘Legg Mason Australia’ is a reference to Legg Mason Asset Management Australia Limited. These opinions are subject to change without notice and do not constitute investment advice or recommendation. Past performance is no indicator of future performance.

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