What the ‘next normal’ means for fixed income: reimagining core bonds

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Capital Group's text centers around a shift in the investment landscape from a low yield environment to one marked by higher expected inflation and more cautious central banks. In this changing financial climate, investors have seen high yields in fixed income, even for traditionally safe assets.

Adapting Portfolio Strategies in the 'Next Normal'

Unmentioned in the first part of the discussion, but crucial to the theme, is the necessity for investors to reassess their portfolio strategies. With these changes, the risk/return profile of each component of the portfolio warrants review. In this new financial regime, the largest bond allocations may regain their traditional roles of income generation and diversification from equities.

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