Does that make the lowest-risk sovereign bonds a good investment at current prices? Yes, for a proportion of your holdings, especially if you are an investor whom by age, wealth or other personal circumstances requires a conservative portfolio. However, there is an alternative asset class with significant attraction – blue chips.

The Economist notes that in Europe yields on ten-year government bonds have fallen well below average dividend yields. “Even if dividends did turn out to be stagnant for the next decade” – as derivatives suggest the market expects to happen – “investors would still get a higher income from equities than from government bonds.” [Read more...]