“Thank you for posting the Weekly View re Bonds and the interesting chart. This seems to bear out your own views on the risks of longer dated issues. However for those of us who are in need of some diversification in our portfolios from stock risks and their correlation, bonds seem to be the chosen route of the few investment books I have read. Perhaps holdings in direct property trusts is a better solution but their yields are also sensitive to interest rates. How would you tackle the issue of diversification for the medium term if an investor is not happy with and aggressive allocation to stocks? My continued thanks to you an Eoin for the excellent comment which you have maintained so consistently through the migration to the new service.”

David Fuller's view

Many thanks for your kind words.

If you diversify by placing some of your investment capital into bonds, I would buy only short-dated issues of 2 years or less, preferably in US Treasuries while the dollar remains strong.  I would do so by purchasing the bounds outright, rather than funds, because you do not need any additional costs for this protective stance.