AMP Drops Bonds From Pension Funds, Citing Lost Hedge Value
Australian asset manager AMP has removed bonds from select retirement funds, arguing sovereign debt no longer buffers against stock market swings.
AMP Ltd., one of Australia's largest asset managers, has stripped bonds out of certain retirement funds after concluding that sovereign debt no longer provides the diversification protection investors have counted on for decades to offset equity market volatility.
The move marks a significant strategic shift for a major institutional player in Australia's pension landscape. For much of modern portfolio theory's history, government bonds have served as a reliable counterweight to stocks — rising when equities fall and cushioning portfolios during turbulent markets. AMP's decision signals growing institutional skepticism that this relationship still holds.
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The breakdown of the traditional stock-bond correlation has been a mounting concern among global asset allocators, particularly after the 2022 selloff in which both equities and bonds fell sharply in tandem as central banks aggressively hiked interest rates to combat inflation. That episode rattled long-standing assumptions about balanced portfolio construction and forced managers worldwide to reassess their defensive allocations.
By removing bonds from some of its pension products, AMP is betting that other asset classes or strategies can better protect retirees' savings when equity markets turn south. The firm's move could prompt other Australian superannuation funds — which collectively manage trillions in retirement assets — to reconsider their own fixed-income allocations in an era of persistently higher interest rates and evolving macroeconomic dynamics.
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