Sam Watkins

Those bonds, those are the two things that I think really are anchoring the argument as to why now for investors.

And what I would point to is that with that level of uncertainty in the world right now, expectations for what equities might do in the next 12 months, two years, there's a level of uncertainty.

What we have is a level of certainty that exists with bonds at the moment, where depending on your investment time horizon, you could look at something like the exchange traded fund Earn that PIMCO has, which is a very short term investment.

So something where an investor might have a time horizon of six months, 12 months.

That at the moment has a yield to maturity of 4.82%.

So it's around about half a percent higher than where the Reserve Bank is today.

If you've got a longer term horizon and you want to lock in those higher interest rates for a period that might be a little bit longer, we have the PAUS, which is our Australian Bond Fund.

That has a yield which is a little over 6%.

So it's nearly 170 basis points above where the cash rate is today.

If you go a little bit further and look at what the global opportunity set is, we have also listed on the stock exchange our PGPF exchange traded fund, which is our global bond fund.

And that at the moment has a yield to maturity of over 7%.

So that is, of course, around about 270 basis points, 2.7% above where the cash rate is.

So very attractive levels of return for what we would describe as being fairly moderate levels of risk.

And what that means is that your view on equities or any higher risk category needs to be that it can substantially beat 7%.

And if you can't get comfortable that something's going to substantially beat 7%, then bonds are a pretty compelling place to be putting money today.

That's exactly right.

And I think I mentioned some of those statistics last time I was on the show, that it's roughly 75% of active bond managers beat the benchmark on a rolling basis.

And it's, as you rightly point out, almost the opposite in the equity space.

And I think that is the argument for not only why bonds now, but why active bonds right now.

One book I'm reading at the moment, and I'm only partway through, is Street Smart by Lloyd Blankfein, who, of course, is the ex-CEO of Goldman Sachs.