As bond yields remain elevated and investors weigh the implications of inflation, growth and the AI investment surge, understanding the role of duration has never been more important.

While higher yields have challenged investors in recent years, Pendal head of government bond strategies Tim Hext explains why bonds continue to play a vital role in portfolio construction, particularly during periods of genuine economic stress. 

He also discusses the importance of active duration management and why the next phase of the market cycle could create attractive opportunities for long-term bond investors.

Here's an excerpt from the video podcast:

"Defensive is for the true risk-off events like a recession, like the GFC, like the early part of COVID. That's what we generally mean by defensiveness.

"If you lock in bonds at six per cent for five years or 10 years, and rates start coming down, you're still earning that return. And of course, they're going to become a lot more valuable.

"At some point bonds are going to be very, very attractive to lock in. The big question which I've got to manage as an active manager is when.

"There will be a point somewhere in the next six months to 18 months where we will start to extend the portfolio significantly as we tip over into this new environment."

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Learn more about Pendal Government Bond Fund

Learn more about Pendal

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