Brad Bugg, Head of Fixed Income and Currency with Ibbotson Associates, a Morningstar company, says bond yields present a risk to two of the three key elements that we look for in an international fixed income portfolio. The role of international fixed income in a portfolio is to protect the real value of portfolio investments, generate stable income, and add diversification to a multi-asset portfolio, Bugg tells Morningstar Australasia's Victoria Tait. But with yields currently at or near record lows in many countries, the prospect of rising yields in the not-too-distant future raises the risk of negative capital returns, while current low yields diminish the diversification benefit of an international bond portfolio. We're still working on the transcript so please check back shortly
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