The financial media is partly to blame for the huge movement out of bonds, according to Douglas Hodge, chief operating officer of bond giant Pimco, who said that net inflows to bonds will return over the longer term.
"In the aftermath of the financial crisis,the media—which play a large role in setting the tone of the markets and the psyche of investors—went from being cheerleaders for bonds, stressing their virtues and role in maintaining a diversified portfolio, to romancing the notion that bonds are riskier than stocks," Hodge said in an piece posted on the California-based firm's website on Monday.
"While the media may have succeeded in sullying sentiment, their message that bonds are riskier than stocks is untenable," he added.
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Concerns about an imminent tapering off of Federal Reserve asset purchases have led a flight to cash from equity and bond funds. Bond yields have been on a one-way ticket higher since May, when the Fed's policy minutes sparked fears it would start scaling back quantitative easing this year.