Use select charts from the Guide to the Markets to engage in portfolio discussions.
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Diversifying fixed income
Investing beyond traditional "core" U.S. investment-grade bonds into core complement and extended sectors may provide benefits regardless of rate and inflationary environments.
Diversification provides access to less rate-sensitive segments of the fixed income market
- Core complements such as absolute return, high yield, floating rate, convertibles and inflation hedging-strategies can help diversify core holdings by reducing the impact of rising rates.
- Extended sectors have low correlations to core bonds. As such, they tend to be less susceptible to rising rates and often benefit from economic growth.
- High yield bonds can be an important source of income in a low rate environment and are able to better withstand rising rates because their higher coupons may offset capital losses.