- Accordingly, it’s not surprising that investors are thinking about the risk of meaningfully higher interest rates and, as a result, falling bond prices.
- We believe core, investment-grade bonds have a role in a diversified portfolio regardless of market conditions.
Pent-up demand from households and businesses, bolstered by historic levels of fiscal and monetary accommodation, should make for a historically robust economic recovery in the coming quarters as the global economy continues to recover from COVID-19. This could push global bond yields meaningfully higher. Because bond prices move inversely to yields, some fixed-income investors are understandably concerned about the possibility of falling bond prices. While seeing a price decline can be disconcerting, we believe investment-grade bonds should continue to provide important diversification benefits for investment portfolios and positive returns over both intermediate and longer time horizons (even in the unlikely case of a longstanding move to significantly higher bond yields).DOWNLOAD THE FULL COMMENTARY
- Bloomberg Barclays Global Aggregate Bond Index measures the return of the global, investment-grade debt market.
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