Justin Floor’s article (“Are hidden risks lurking in your multi-asset fund?”, November 3) stating that the 60/40 traditional mix of asset allocation is outdated is written from the perspective of a fund manager and price-to-market reporting, when he observes that bonds and equities often move together now.
The reason investors put a portion of their assets into bonds is so they have that portion yielding a fixed, no-risk return, not so that they can trade in or out as the market price of the bond fluctuates.
If he purchases a bond with a fixed maturity date directly (not in a fund holding bonds with differing maturities) and holds it until that date, its movements in the meantime do not matter to the holder.
Certainly, there may be opportunity costs if rates move up, but the fixed basis of the return is his choice when he buys the bond.
Sydney Kaye
Cape Town
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