The belief that bonds offer protection when equity markets fall is not always accurate, the reality is far more nuanced as many investors painfully found when interest rates began their rapid rise last May. While bonds and equities spent more time correlated than non-correlated in the last 100 years, the correlation between the two asset classes has changed due to different underlying risk factors. Bonds and equities both declined at the same time in 2018, and both asset classes have a high level of correlation when interest rates rise. There are times when bonds can prove to be a good portfolio diversifier and offer a level of protection against equity market falls, but it depends on the underlying risk factors at play rather than arbitrary rules or beliefs. Dan Miles divers deeper into this topic in our latest portfolio insights article.

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