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.”
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