The bear market in bonds isn’t all bad news

The rise in bond yields and the fall in bond prices can be a good thing or bad thing. Bad for bondholders, but good for many risk-averse pensioners and pension savers. Max King explains why.

Protest against Universities Superannuation Scheme plans to discontinue defined benefits
Members and providers of fully-funded defined benefit pension schemes, such as the Universities Superannuation Scheme, are among the winners
(Image credit: © Richard Bradford / Alamy)

Is the rise in bond yields and corresponding fall in bond prices bad news or good news? It depends on your perspective.

In the last year, yields on ten-year gilts (UK government debt), having been barely positive a year earlier, rose from 0.5% to a mid-June peak above 2.5%, though they have since slipped back to 2.1%.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.