Advised Invest Funds but Negative Market Sentiment

Why do we advise you to invest in certain funds or markets yet we have a negative market sentiment for the same sector?

We cannot ‘call the market’ as any sentiment is ‘educated guess work’ i.e. it is a gamble, so we must make fund recommendations in accordance with your risk profile even if we personally think a particular sector may fall in value.

For Example in January 2019
We have recommended Fixed Interest and Index Linked Government Bonds, Corporate Bonds and Gilt Funds to investing clients yet we "PERSONALLY" have a negative sentiment towards these with a "RED" status i.e. we are not personally investing in them?

Why? An example ....

You invest/buy a Government Bond £100 (nominal value) paying a 2% coupon (interest rate) = £2 pa income.

If central banks then increase interest rates rise 0.25% and then bond yields are pushed to rise from 2% to 2.25% the above bond is now worth how much? = £89 (it has gone down in value)

Why worth only £89 now?   £89 X 2.25% = £2 pa income.
The above 2% pa fixed interest coupon £100 bond is now worth £89 on the open market.

Advised to Invest in Bonds v Our Market Sentiment?

As at January 2019, we fear for interest rate rises in the US and UK and potentially Europe.

If interest rates are increased i.e. rise to try and curb inflation, capital values of both inflation linked/index linked and fixed rate bonds/gilts will fall.

That said, recently European Central Bank has postponed interest rate rises due to recession risk and the Central Bank of India has reduced interest rates i.e. Capital Values of Global Bond/Fixed Interest funds may rise.

We are negative, but we must recommend such funds as part of a balanced portfolio for clients, even when some of them could fall in value counteracting rises elsewhere.

Investment fund advice is our advice on funds and the spread of funds based upon a balanced portfolio within your attitude towards risk and tolerance to investment losses.

This is done irrespective of whether markets are likely to rise or fall or what our market sentiment or indeed other investment commentator sentiment is.