UK - Index-linked bonds are a safe alternative to equities but should not be used to maximise returns, Axa Investment Managers warns.
It believes the asset class should only be used as part of a “buy and hold” strategy – even though it has outperformed equities and gilts.
Axa senior strategist Nigel Richardson stressed that investors should buy index-linked bonds (linkers) to minimise their risk.
He said: “Given that linkers’ yields have fallen to historically low levels, investors should not buy them because yields are especially attractive and the asset class offers the central prospect of continued outperformance against both equities and nominal bonds.
“Linkers are for investors – those that have suffered equity losses and whose risk appetites have shrunk – that seek to minimise risk, rather than maximise their rewards.”
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers