Central bank policy has left no 'safe havens' for investors, bond expert says

There are no traditional "safe havens" for investors anymore given the current climate for bond yields, according to Stephen Oh, the global head of credit and fixed income at PineBridge Investments.

Government bond yields worldwide have endured historic lows of late, with interest rates on much of the world's traditionally reliable sovereign debt either at or below zero. Yields move inversely to prices.

This means that in some cases, investors are buying into a bond guaranteed to lose money if held to maturity.

Speaking to CNBC's "Squawk Box Europe" Wednesday, Oh said the dual role typically held by bonds, of both safety relative to risk exposure and income generation, had fallen away.

"Given negative yields or no yields in most parts of the world, that income component is lacking," he said.

"Furthermore, where current yields are, your safety component is questionable going forward. Because what is the lower bound at the end of the day? At what point do you have correlation both to the upside and the downside with both bonds and your risk assets?"

Oh suggested that central bank policy, such as persistent low rates, has pushed investors into taking more risk, since moving into traditional safe assets entails losing money.

"What we would advocate is not trying to extend out on the government bond yield curve. You have to have that component within your portfolio, so you have to maintain some component," he said.

"So what you're looking for in many cases are instruments that are cash-like substitutes perhaps, where you can get something in the positive yield territory without taking much in the way of interest rate exposure."

Oh suggested this could come in the form of "high-quality" structured products, and that where risk is being induced by central bank policy, investors should take "targeted risk" in the parts of the credit spectrum where yield is possible on a risk adjusted basis.

"But there's no safe havens out there anymore," he concluded.

Euro zone bond yields touched their highest since early August on Wednesday amid doubts over whether the European Central Bank will unveil a fresh round of asset purchases, or quantitative easing, on Thursday.

U.S. and German benchmark bond yields have risen on recent trade war de-escalations, but remain susceptible to persistent macroeconomic and geopolitical pressures.

Last week, Wells Fargo Global Head of Rate Strategy Michael Schumacher cautioned investors against getting too bullish on the recent rally in U.S. Treasury yields, telling CNBC's "Futures Now" that while bond yields are reacting to a brief period of "good news," there are still "so many choppy factors out there."

Read More