Bonds fall from favour as shock absorbers for equity losses

Ultra-low rates force investors to rethink role of fixed income as diversifier

Back in 2017, $95 billion quantitative fund Acadian Asset Management constructed a new systematic, multi-asset approach to diversification, based on the philosophy that investors could no longer rely on bonds as the main counterbalance to risk in equities.

“Even though you can argue that [with equities and bonds] you are diversified, and there are many strategies that have tried to do this, bonds are still highly correlated to equities – maybe not on a day-to-day basis, but in a huge risk-off