Government bond yields have risen across major developed markets. This means bond prices have fallen, as investors reassess the outlook for inflation, interest rates and government borrowing.

The recent selloff has reflected a mix of factors, including inflation worries, increased government borrowing and uncertainty over how long interest rates may need to remain elevated.

Energy prices are one of the reasons markets have become more cautious. The conflict involving Iran has raised concerns about supply disruption, and higher oil prices can make inflation harder to bring down.

Markets making the headlines can cause concern, particularly when it affects parts of a portfolio that investors often associate with stability. Bonds may move quickly when investors change their views on inflation, interest rates or the strength of the economy.

Higher government bond yields can affect many parts of financial markets because they influence borrowing costs for governments, companies and households.

We do not try to position portfolios around every short-term geopolitical development. Instead, we aim to control what we can: building diversified portfolios, managing sensitivity to interest rate and inflation risks, and reviewing positioning regularly as conditions change.

The investment process is built for different market environments, not just calmer periods. We had already positioned portfolios with a more uncertain inflation backdrop in mind, including the possibility that energy prices, supply disruption or government borrowing concerns could unsettle bond markets.

Portfolios are reviewed regularly to check they remain aligned with their objectives and risk profiles. They are also diversified across asset classes and global regions, so they are not reliant on one market, sector or investment theme. Regular rebalancing helps keep portfolios in line with their intended risk level.

Before the recent volatility, we had generally favoured shorter-duration fixed income exposure across the portfolios. We had also moved into shorter-dated real yields, including inflation-linked bonds in the US and UK. These holdings can offer some inflation linkage, but they can still be affected when real yields rise. Keeping the exposure shorter dated has helped reduce sensitivity to longer-term yield moves.

The portfolios have also maintained exposure to parts of the equity market that can respond differently to inflation and geopolitical risk. This includes US energy, which may be supported when oil and energy prices rise.

These positions were not introduced as a short-term forecast on geopolitical events. They reflect a broader approach to portfolio construction, where we accept that market shocks are unpredictable and focus on building portfolios that can cope with a range of outcomes.

Inflation may be more volatile than it was during the decade after the global financial crisis. During that period, globalisation, stable supply chains and low interest rates helped keep inflation relatively subdued.

Today, inflation is being influenced by a wider range of factors, including energy markets, trade policy, tariffs, supply chains and geopolitical tensions. These are harder for central banks to control because interest rate changes cannot directly resolve supply disruptions.

Investment decisions should be based on your long-term goals, attitude to risk and personal circumstances, rather than short-term market events. If you are unsure whether your investments remain suitable, you should speak to your financial adviser.

Market volatility can be uncomfortable, but trying to time markets is difficult. Staying invested in a diversified portfolio is often a more effective approach for long-term investors than reacting to short-term uncertainty.

If you have questions about your investments, please speak to your financial adviser. They can help explain how recent market events may affect your plan and whether any action is appropriate for your circumstances.