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In the Loop
Higher Rates Call for A Closer Look at Fixed Income
March 22 2024Over a period of 18 months, monetary stimulus implemented during the global pandemic have given way to tighter monetary policies and higher interest rates, leaving investors facing big changes to the fixed income market. As a result, fixed income investors in retirement plans and their advisors should take a closer look at fixed income investments from two key perspectives. First, retirement plans and advisors should look at the plan’s fixed income investment lineup to see if they’re appropriate for a new environment in which interest rates are likely to remain higher for longer. Second, take a look under the hood at how fixed income is being used inside multi-asset strategies, which likely serve as qualified default investment alternatives, and assess the potential use of diversifiers and enhancers.
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Definitions:
Bar Cap Ag: Bloomberg Barclays US Aggregate Bond Index, renamed the Bloomberg US Aggregate Bond Index in 2021.
QDIA: Qualified Default Investment Alternative
Risk Considerations:
Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.
All investments involve risk, including possible loss of principal. Fixed income securities are subject to credit risk, liquidity risk, call risk, and interest rate risk. As interest rates rise, bond prices generally fall.
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