August 23, 2021
Not all fixed income investments are made equal. Each year performance is varied across subsectors within fixed income resulting in new opportunities for income and growth across a $123+ trillion global bond market (as of 2020 end). Within each of these indices, there is a divergence among the risk profile and yield of constituents. This became increasingly apparent when comparing overall index yields in 2020 vs 2021- noting the similarities in overall yields but vast differences in the highs and lows of the individual issues.
Sources: Morningstar Direct, July 2021. Past performance is not a guarantee of future results. Investing involves risk, including
the possible loss of principal.
US Govt: 10 Year US Treasury Index, US MBS: Bloomberg Barclays US MBS Index, Global USD: Bloomberg Barclays Global Aggregate Ex-USD Index (USD Hedged), US AGG: Bloomberg Barclays US Aggregate Index, Global: Bloomberg Barclays Global Agg Ex USD Unhedged Index, US IG Corp: Bloomberg Barclays US Corporate IG Index, EM Local: JPM GBI-EM Global Diversified Index, EM Hard: JPM EMBI Global Diversified Index, US HY: Bloomberg Barclays US Corporate High Yield Index, Loans: S&P/LSTA Leveraged Loan Index
What this means for investors
Be mindful of your allocations across each area and subsector within fixed income. In a fast moving market, driven by government intervention, resulting in frequent
dislocations, paying attention to your allocation within fixed income is just as important as overall portfolio allocations. Active managers and diverse, multisector type funds can help navigate these markets and find opportunities to capitalize on.