The income equation: why the bond+equity solution still adds up

By Marek Krzeczkowski

Forced by the global financial crisis into interest rate cuts and unconventional moves such as ‘quantitative easing’, central banks set the scene for the lower-for-longer era that dragged on for more than a decade.

With inflation seemingly benign despite the extreme volume of free money flowing through the system, monetary authorities loosened further – even into negative rate territory – as an antidote to any Covid-19 economic disruption.

Whatever the policy rationale for maintaining rates at ultra-low levels, conservative investors looking for a reasonable steady yield from ‘safe’ products such as bank term deposits faced an uncomfortable truth: either accept increasingly lower returns or take on more risk.