Bonds emerge as the best financial asset in 2011

Bonds have turned out to be the most profitable financial asset in 2011 overtaking stocks, commodities and currencies. This is the first time in more than a decade that bonds have outperformed other financial assets.

According to Bank of America Merill Lynch index, bonds gave 5.89 returns in 2011 followed by dollar which gave 1.6 per cent return.

Both commodities and equities gave negative average returns in 2011. Standard & Poor's GSCI Total Return Index of commodities fell 1.18 percent while the MSCI All Country World Index (MXWD) of equities fell by 6.9 percent

Among sovereign bonds US treasuries gave the maximum returns. The sovereign bonds of United Kingdom too performed well and their prices increased by 17 per cent in 2011.

Sovereign bonds gave average return of 6.1 per cent in 2011. The volatility in equity markets around the world caused investors to put more of their money in bonds.

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