When is a long duration bond fund a good buy?

Frequentlyhere

I'm quite interested in risk parity portfolios as an investment theory, and they typically contain an allocation to a long duration bond fund, as I understand it because they're especially volatile and can give outsized returns when other things are failing.

The first part is certainly true of a fund like the Vanguard UK long duration gilt index, which has fallen a rather astonishing 40% nominal since May 2020. 

So for those into this sort of active investment, I'm curious what you think of the prospects of this sort of fund in the medium term?  Also is anyone aware of any corresponding global fund? All I can find is an ishares Euro and US long fund at the moment.

masonic

The UK is a bit of an outlier when it comes to the debt maturity it issues. A long dated gilt could easily outlive the holder. Bonds gave superb returns to investors who held them at the time of the gfc and beyond. Decades of cash flows were pulled forward into capital gains. The 40% drop is a reversion to the mean, and I expect this trend will overshoot and present an opportunity in the near future. Once interest rates balance out they will probably be restored to their former glory as the asset of choice for balancing equities. At the moment there's still a strong correlation with equities, as both asset classes are suffering at the hands of ever more aggressive interest rate policy and worsening outlook for inflation.