With the current uncertainties in the market, it is difficult to predict which way she will go over the next one to three months. If you think about the tough decisions regarding equities, the proponents in the opposite camps (the fixed income groups) are not having any easier space. Just look at the universe of bond funds and you will realize that getting into bonds is not as easy as getting a Char Siew Pao at your local 7-11 friendly store.
(Oh yes, by the way, if 7-11 store claims that they never closed, then why are there locks on their doors? I am still puzzled till this day? Any one knows?)
Question is: Are we done with the correction yet?
Answer: Wrong question!!!
A better question is "Are we done with the misplaced confidence in the bull market yet"?
This market is due for a crude awakening. When that realization dawn upon investors, the flight to safety will commence and then the market will start to have another set of concerns: Where to re-allocate?
Bonds have not fare well over the last 4 years (compared to equities). Will they perform now? If so, which one? Global or regional? High yield or high grade? Which fund houses? What about my local governement debt securities?
Looking at the above chart, you will find that some bonds are valued higher than others, but with much lower volatility. Now, volatility is not a bad thing. You need to manage it. Others offer value now but inherently have higher volatilities. The key is balance. If you are already in a balanced portfolio, then balance your balanced portfolio. There is much allocation to be done even within the bond segment. So take a look again at your bond holdings. It pays.
Good luck.
