Why it’s time for a rethink on defensive assets
Angus Crennan argues that traditional defensive assets are no longer delivering the desired results. So, what is the future of the current “safe havens”?
It is certainly indicative of which part of the investment cycle we have reached when even PIMCO publishes a white paper* noting the real yield (ie, after inflation) on US government bonds is negative out to 20 years.
They also conclude that as long as central banks continue to print currency and maintain negative real interest rates, gold and other assets that store value should be considered.
So what does this say about the future for traditional “defensive” assets? (See Table 1)
{^image|(width)600|(height)163|(mouseoverheight)261|(url)http://media.cirrusmedia.com.au/Money_Media_Library/Print Images/121122/p21_MMNOV22_1.jpg"http://www.pimco.com/EN/Insights/Pages/GOLD-The-Simple-Facts.aspx" target="_blank">* PIMCO Viewpoint, October 2012
Angus Crennan is an investment specialist at Zurich.
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