According to this news article, USD10 trillion has been put into negative-yielding long-term government bonds.
Why don't these investors transfer funds into short-term positive-yielding government bonds instead? It is still the same government, so the risk should be the same. In fact, the risk of default is lower since the bonds are held for a shorter period. Lower risk, higher yield, why not invest in them?
I have no finance background. But my common sense tells me that investing in bonds that are guaranteed to lose money over a multi-year (some extending to 10 years) period is stupid. Yet, it cannot be a stupid move since USD10 trillion is a huge sum of money that is controlled by professional, institutional investors who must be smarter than retail investors like me.
Can someone explain what are the reasons behind this seemingly "stupid" investment? I am totally baffled by "smart" money.