As markets absorbed the reality of a Trump election win in the US, we have seen the beginnings of a ‘great rotation’ out of global bonds and into global equities. In this report we discuss some of the investment principles that underlie the resulting modest drop in bond values. World bond markets are more than double the size of world equity markets, with massive trading volumes that rapidly assimilate new information into prices. As such, it is possible for the tradeable price of bond holdings to drop in response to an unexpected rise in the outlook for interest rates – as occurred with the Trump victory. This may surprise some investors who think of all fixed income securities as though they are term deposits held to maturity and then repaid. Whilst bond values are far less volatile than shares, the same core investment principles of risk, return and diversification are equally relevant.