Short-duration bonds offer attractive yield/duration
Given longer-term interest rate uncertainty, short-duration assets may provide investors with better yields with less term-risk than longer-dated bonds.
Bond funds tend to outperform Certificates of deposit after peak rates
- Higher yields continue to drive investor interest in certificates of deposit (CDs), which become increasingly vulnerable to reinvestment risk as the Federal Reserve's hiking cycle approaches its end.
- Although subject to price volatility, short-term and intermediate core-plus bonds outperformed CDs notably following the last six peaks in CD rates over the past 39 years.
SEE OTHER SPOTLIGHTS
SPOTLIGHT | On the Markets
Data illustrating current market conditions and trends—and what they mean for investors
High growth stocks on sale after recent sell-off
Lower prices from the recent sell-off may present good entry points for quality companies able to deliver consistently strong earnings growth.
History Favors Equity Investors After Negative Years
Despite more potential volatility in 2023, investors may be able to capitalize on tax loss harvesting and rebound opportunities.
Bonds Deliver Strong Returns After Yield Curve Inversions
Fixed income investors may reap the benefits of higher income and greater return potential going forward.
*A CD is a savings account that holds a fixed amount of money for a fixed period of time, and in exchange, the issuing bank pays interest and is FDIC insured up to $250,000 per the US Securities and Exchange Commission. When you redeem your CD, you receive the money you originally invested plus any interest. Short-Term Bonds invest primarily in corporate and other investment-grade U.S. fixed-income issues and typically have durations of 1.0 to 3.5 years. Intermediate Core-Plus Bonds invest primarily in investment-grade U.S. fixed-income issues including government, corporate, and securitized debt, but generally have greater flexibility than core offerings to hold non-core sectors such as corporate high yield, bank loan, emerging-markets debt, and non-U.S. currency exposures. Returns for 3-years and 5-years are annualized. Average returns are calculated following peak CD rate periods, it is important to note that other periods may have produced different results. CD peak rate periods are based on historical monthly data. For illustrative purposes only. Investing involves risks. Some investments are riskier than others. The investment return and principal value will fluctuate, and shares, when sold, may be worth more or less than the original cost. Past performance is no guarantee of future results.
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