Why is AMP removing bonds from retirement funds?

AMP believes elevated inflation erodes bond value over time, and the higher correlation between bonds and stocks has reduced their ability to cushion equity losses during volatile downturns. The fund manager is no longer convinced bonds will provide the diversification benefits they historically offered.

What is AMP replacing bonds with?

AMP has shifted toward corporate credit while seeking greater exposure to commodities and agriculture to better diversify portfolios. The reallocation has also helped finance overweight positions in global equities.

Is AMP alone in this shift?

No. The Future Fund, Australia's sovereign wealth fund, said in 2024 it would look to hedge funds rather than sovereign debt to offset equity risk, and Colonial First State has also broadened its fixed-income allocations beyond government securities.

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AMP Cuts Bonds From Retirement Funds, Shifts to Corporate Credit

Yahoo Finance AI2d ago4 min read

Key takeaway

AMP Ltd., a major Australian asset manager, has removed government bonds from some retirement funds and cut bond allocations across its portfolio over the past six to 12 months, shifting instead toward corporate credit and commodities. The move reflects concerns that elevated inflation and rising correlation between bonds and stocks have eroded bonds' traditional role as a hedge against equity losses, a stance shared by other large Australian institutional investors.

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3 Key Points

What happened
AMP Ltd., which oversaw A$162 billion（約26兆円） ($112 billion（約18兆円）) as at February, has removed government bonds from retirement portfolios for younger investors and reduced bond allocations across other funds over the past six to 12 months. The fund manager has instead shifted toward corporate credit and increased exposure to commodities and agriculture.
Why it matters
Bonds have historically shielded investors from stock losses, but elevated inflation erodes their value and higher correlation to stocks has reduced their defensive power during market downturns. AMP's Chief Investment Officer Anna Shelley stated the firm is no longer convinced bonds will provide diversification benefits in what it views as a structurally difficult market for fixed income.
What to watch
AMP's MySuper 1970s portfolio, one of its largest retirement funds, posted an 11.3% return for the year through June 30. Other major Australian asset managers—the Future Fund and Colonial First State—have similarly reduced reliance on government bonds, signaling a broader institutional shift away from traditional defensive assets.

FAQ

Why is AMP removing bonds from retirement funds?: AMP believes elevated inflation erodes bond value over time, and the higher correlation between bonds and stocks has reduced their ability to cushion equity losses during volatile downturns. The fund manager is no longer convinced bonds will provide the diversification benefits they historically offered.
What is AMP replacing bonds with?: AMP has shifted toward corporate credit while seeking greater exposure to commodities and agriculture to better diversify portfolios. The reallocation has also helped finance overweight positions in global equities.
Is AMP alone in this shift?: No. The Future Fund, Australia's sovereign wealth fund, said in 2024 it would look to hedge funds rather than sovereign debt to offset equity risk, and Colonial First State has also broadened its fixed-income allocations beyond government securities.

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