Risk: Time to diversify differently

Diversification could be more difficult to achieve, however, as equity bond correlation tends to rise in more inflationary environments. Adding flexibility and shortening duration in fixed income Traditionally, government bonds have been seen as an important source of income for portfolios, but also of diversification against equity exposures - as in the classic 60/40 allocation. An environment of structurally higher inflation and heightened market volatility makes it more likely that government bond yields could rise at the same time as equity markets decline, however, as we saw in...