Bond Investing in a Low-Yield Environment

Amid record demand from fixed-income investors, bond yields have sunk to multi-decade lows. These developments have led some to question whether bonds are less desirable investments as a result of lower yields. While no one can predict with certainty the near-term outlook for bond prices or interest  rates, looking at the long-term history of high-quality bonds provides a number of lessons, some cautionary and some comforting, that may be useful for investors to consider. In general, bond investors may benefit from: maintaining realistic expectations; remembering the attributes of bonds; and diversifying their fixed-income portfolios.

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Steven Karsh