Who the fuck buys bonds?

Around 60% of bonds have a yield lower than 1% and 80% a yield lower than 2%. Lots of bonds actually have a negative yield, and that's even before taking into account inflation.

In that context, a bond-equity portfolio is actually no more than a long-only equity portfolio. Why would anyone buy or even trade bonds?

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  • Intern in Consulting
Nov 17, 2021 - 3:24am

Well, I'd assume insurance companies, considering they need financial instruments that can allow them to match liabilities with cash flows. They don't necessarily need crazy returns, especially if they turn an underwriting profit.

  • Assistant PM in AM - FI
Nov 17, 2021 - 10:56am

Intern, im assuming you must know atleast the basics of Finance?? Look into the Japanese Asset bubble or any other asset bubble throughout history. Too much capital plowing into an individual asset class will absolutely destroy that market. Also a lot of the times in the institutional space, when you're looking at bonds trading at 100m+, provide a lot higher returns than equities with a lot lower volatility and correlation to other assets. I can go on and on honestly.

Nov 19, 2021 - 4:58pm

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