Courtiers Wealth Management
Courtiers Wealth Management

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Bonds – Should we buy them?

23 Feb 2023

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People who are waiting for interest rates to return to the lows of summer 2020 “may be waiting another 700 years.” That’s the view of Gary Reynolds Courtiers CIO.

Gary was responding to Leo’s questions about a research note in which Gary seeks to answer one of the key questions exercising the minds of investment managers everywhere: where are interest rates going?

Not only do interest rates reflect the cost of borrowing, but they’re the key factor in determining the price of one of the two great asset classes, namely bonds. And in turn bond values impact the performance of the Courtiers Multi-Asset Funds.

In short, interest rates matter. So, when Gary recently produced a research note to share with the Investment Team considering where interest rates might go next, we thought it might be of interest to a wider audience. You can read the note below.

In the video accompanying the research note, Gary begins by explaining the relationship between interest rates and bond prices. When interest rates fall bonds prices rise. And when interest rates increase bond values drop, culminating in interest rates hitting record lows in 2020.

During the course of 2022, as interest rates began to move upwards this fall was precipitous, with long-duration gilt prices collapsing by 40%, leaving many investment managers nursing heavy losses. Gary explains how by deciding to hold “hardly any long-dated bonds in the portfolio,” (long-duration bonds are particularly sensitive to changes in interest rates) Courtiers “escaped” this decline.

In his video interview with Leo, Gary explains why he thinks it’s “unlikely” that interest rates will return to their all-time lows of 2020 (global interest rates were the lowest for 700 years). This is not only because of what’s termed mean reversion that values eventually return to their long-term average, but because “some common sense would draw you to the same conclusion.”

Gary argues that the two decades up to 2022 were subject to a combination of unusual factors that led to ultra-low interest rates, but that crucially this combination of factors is unlikely to occur again. Alongside globalisation, low inflation and the pandemic, he highlights Quantitative Easing (QE). This led Central Banks, among them the Bank of England to increase interest rates to curb rising prices. “The point here is another dose of QE would not have the same effect on interest rates as it had in 2009,” writes Gary in his research note.

What does this mean for the Courtiers investment strategy? Gary explains that with recent increases in interest rates and bond yields “unlikely to be a temporary phenomenon, the risks to bonds are still on the downside”, and consequently, “We won’t be stuffing too much long-duration bonds into the funds.” Anyone waiting to see rates return to the low levels seen in the summer of 2020 “may be waiting 700 years for that to happen,” he concludes.

In his video interview with Leo, Gary explains why the start of this year has been better than 2022 on the markets and reiterates the Courtiers Investment Team mantra, “do not overpay.”

He says he’s pleased with the start made by the Courtiers Ethical Value Equity Fund but cautions that it’s very early days. “We’re in it for the Marathon, we’ve covered about 50 metres so far.”

And he reinforces CEO Jamie Shepperd’s views on succession planning at Courtiers. “You’ve got a great Senior Management Team, and there will be more people doing more things and taking the day-to-day roles away from us, but that’s a good thing because it’s an evolution. But we’re (Jamie and I) not going anywhere because we love it too much.”

Important information

Issued by Courtiers Asset Management Limited, CAM0223722. Courtiers Asset Management Limited is Authorised and Regulated by the Financial Conduct Authority – Register No: 616322. Address: 18 Hart Street, Henley on Thames, Oxfordshire RG9 2AU. Tel: 01491 578368.

Past performance is not a reliable indicator of future returns. The value of investments, and the income from them, can go down as well as up and is not guaranteed and you may not get back the amount originally invested. Any forecast, projection or target where provided is indicate only and is not guaranteed in any way. Certain types of funds might carry a greater investment risk than other investment funds. Further details of the risks are associated with investing in Courtiers funds can be found in the Key Investor Information Document or Prospectus, copies of which are available on request or at



This communication is for information purposes only and should not be relied upon in making an investment decision. The views expressed by individuals and the business are based on market conditions at the date of issue and are subject to change without notice. The mention of any stocks or shares should not be taken as recommendation to deal and does not take into account the individual investor’s investment objective or risk profile. Where an investment or security is denominated in a different currency to the investor’s currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor. Any third party sites, or pages which are linked to the document, have not been reviewed by us and therefore we accept no responsibility for the authors or content of external link or pages. If you are interested in any of Courtiers Asset Management Limited’s range of funds, or require any financial advice, please speak to a financial adviser.

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