AMP Cuts Bonds From Pension Funds, Says They No Longer Hedge Stocks

AMP Ltd., one of Australia's leading asset managers, has removed bonds from some of its pension funds, stating that sovereign debt no longer serves as an effective hedge against stock market volatility. The decision marks a significant shift in portfolio strategy, as bonds have traditionally been a cornerstone of diversification for retirement portfolios.

The move reflects a growing concern among institutional investors that the traditional negative correlation between stocks and bonds has weakened or even reversed in recent years. With central banks maintaining higher interest rates and inflation remaining persistent, bond prices have moved in tandem with equities during selloffs, undermining their role as a ballast. AMP's decision could prompt other asset managers to reassess their asset allocation, potentially reducing demand for government bonds and increasing flows into alternative assets or cash. Live stock prices and charts on NowPrice show how equity markets are reacting to this shift in sentiment.

Investors will watch for similar moves from other large pension funds and asset managers in the coming months. The sustainability of the stock-bond correlation regime will be a key theme, with upcoming inflation data and central bank policy decisions likely to influence whether bonds regain their hedging properties or continue to lose their appeal as a safe haven.