People have long viewed bonds as a relatively risk free asset class, and who could blame them; since 1983, the Barclays Aggregate Bond Index has had an 8.1% average annual compound rate of return. During that period, it suffered only 3 negative years, with -2.9% being its worst. With interest rates inevitably rising, these numbers cannot continue. Bonds will switch from being risk free to risky. This “great rotation” from Bonds to Stocks will not be done without angst. Investors’ perception of risk will have change and managers who made their careers during the bond bull market will evolve while a new era of asset allocation is ushered in.

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