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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 the rate and inflationary environments.

Economic Expansions and Recessions
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.
Discussion Slides
Fixed Income Yields and Returns
Sources of Bond Returns
Global Fixed Income

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