Hi, i dont understand how an low investment return can be caused (i) by increase in risk free yields and (ii) how the widening of spreads on this . thanks
If you are already holding corporate bonds and market yields rise, the bond prices (the value of your assets) must have fallen. If these unrealised gains/losses are included in the investment return when calculating the asset share then you will be making less profit. I think (i) and (ii) are examples of why the bond yields might have increased.
