Haynes says there are exceptions, such as index-linked bonds, which pay a coupon linked to the rate of inflation, and their prices can increase on expectation of increasing inflation.
He says the key is for a bond fund manager to take a flexible approach to the duration of the bond portfolio right now.
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"During times when expectations of inflation are increasing, the bond manager should reduce the duration of the bond portfolio (ie the term to maturity of the underlying bonds) as they will be less impacted by future inflation expectations."
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