As always, the future direction of investment markets cannot be known. However, bond markets have had a very long period of growth boosted by declining yields (which increase capital values). The opposite – capital losses – would happen if bond yields increase. The US has seen an increase in bond yields since the US election. This is because some proposed policies are inflationary. An emergence of inflation in the US is not necessarily limited to that country. Inflation can ‘leak’ between economies and/or similar policies could be applied elsewhere. See attached market-update-14nov16. Those investing in bond funds and/or cautiously managed funds (which are weighted towards bonds) are vulnerable to capital losses. Investors should seek advice on this issue.