Summary

There are five important benefits that investors seek from their US Treasury allocation: (i) income and returns, (ii) deflation hedging, (iii) diversification, (iv) duration hedging and (v) liquidity.

In this paper, the Portfolio Solutions Group explains why they believe that both the current low-yield environment and the likely impact on inflation and rates of the momentous events unfolding across the economic, financial and political landscape are weakening the pillars that support the case for US Treasurys.

For both tactical and strategic reasons, therefore, the Team believes that the time is ripe for investors to consider substitutes that may be better equipped to deliver the benefits that investors seek from these instruments.