The Bond ‘Bubble,’ Hedge Funds and Portfolio Allocation
With interest rates so low, there must be a risk that the bond market is in "bubble" territory - and, indeed, that it might burst. Expected returns for equities also exhibit some negative skew. This article considers the historical record - stretching back to the 1970s - to see if CTA ("trend-following") strategies may help investors in periods when bonds and/or equities underperform.