With interest rate rises on the horizon, bonds are unlikely to retain their traditional role of protecting capital in portfolios – meaning investors must take on greater risk both within fixed income and by raising allocations to other asset classes

Fears of a breakup in the eurozone have reduced since the ECB indicated it would do all it could to save the currency, and investors’ attention is now focused on low levels of inflation across the region

Fears over falling growth rates and the end of QE have made investors wary of emerging markets, but these economies should receive a boost as the developed world recovers

Despite volatility over the summer, high yield bond funds continue to attract investors searching for yield in what is a difficult environment for fixed income in general

Absolute return fixed income funds tend to be unconstrained by benchmarks and therefore offer managers the flexibility to outperform, but investors need to be aware of the different strategies

Emerging market bonds have always been volatile and the Fed’s comments about the end of QE saw large numbers of retail investors flee the asset class. But there is a sense the market overreacted and the sell off has created a buying opportunity

As Fed chairman Bernanke set out the case for phasing out all quantitative easing by the middle of next year, what does this mean for the fixed income markets and the role of bonds in private investors’ portfolios?

Fixed income can still play a vital role in client portfolios when combined with other asset classes, but to get the most out of bonds any exposure must be managed in an active manner