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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This podcast is for general information purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It’s been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on the information, consider its appropriateness having regard to their or their clients’ individual objectives, financial situation and needs. The information is not to be regarded as a securities recommendation.

The information in this podcast may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information in this presentation is complete and correct, to the maximum extent permitted by law neither Pendal nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information.

Any projections contained in this podcast is predictive and should not be relied upon when making an investment decision or recommendation. While we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.

Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance.

For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website www.pendalgroup.com

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.&nbsp;
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 <a href="https://pendalgroup.com/products/pendal-government-bond-fund">Pendal Government Bond Fund</a>
Learn more about <a href="https://pendalgroup.com/">Pendal</a>
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This podcast is for general information purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It&rsquo;s been prepared without taking into account any recipient&rsquo;s personal objectives, financial situation or needs. Because of this, recipients should, before acting on the information, consider its appropriateness having regard to their or their clients&rsquo; individual objectives, financial situation and needs. The information is not to be regarded as a securities recommendation.
The information in this podcast&nbsp;may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information in this presentation is complete and correct, to the maximum extent permitted by law neither Pendal nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information.
Any projections contained in&nbsp;this podcast&nbsp;is predictive and should not be relied upon when making an investment decision or recommendation. While we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.
Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance.
For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website&nbsp;<a href="https://aus01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.pendalgroup.com%2F&amp;data=05%7C01%7CDavid.Higgins%40pendalgroup.com%7Cfdc46f1ca2c249af188908db566608e3%7C82bfe2773f1645a49ff4f40692b556b9%7C0%7C0%7C638198768471544474%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&amp;sdata=bo%2FK353stl%2BbgZg2TrxbQ2AY6%2FIRTSbtirIKerFH8Pc%3D&amp;reserved=0" data-auth="NotApplicable" data-safelink="true" data-linkindex="7">www.pendalgroup.com</a>

Perpetual Group is an international asset manager including boutiques such as Perpetual, Pendal, Barrow Hanley, Regnan and Trillium. Each week our portfolio managers share the most interesting things they've heard from CEOs, industry leaders and analysts.

Perpetual Group is an international asset manager including boutiques such as Perpetual, Pendal, Barrow Hanley, Regnan and Trillium. Each week our portfolio managers share the most interesting things they've heard from CEOs, industry leaders and analysts.