However, the correlation between flows into hard-currency bond funds and both local-currency bond funds and equity funds has decreased significantly lately, while the correlation between EM equity fund flows and EM local-currency bond fund flows has trended higher.
The second thing we want is, if we wanted something that was different than a traditional bond portfolio, we wanted each manager individually to have very low correlation relative to traditional bond indexes, like the Barclays Ag.
The equity market has been the beneficiary of the interdependence it has developed with the artificially overbought bond market and it will be this correlation which will cause the equity market to decline as the bond market declines.