April 2023 / VIDEO
Is Fixed Income Having an Identity Crisis?
Future of Fixed Income in DC Plans, 2022 Survey insights from 150+ DC plan sponsors on how fixed income is offered to plan participants
We explore three key themes in this webinar:
- Fixed income markets have structurally changed over time, and more recently, inflationary pressures and higher interest rates have led to historically uncommon volatility in bond markets. At the same time, many plan sponsors are evolving their plan objectives to better address the needs of participants nearing, or in, retirement. Both shifts have implications for the types of fixed income exposure offered to participants.
- In our research, plan sponsors report that the most important characteristics for core menu fixed income investments are the ability to preserve capital and to diversify portfolios—two objectives not always optimally delivered by conventional core bond portfolios. We explore how an “improved core” that offers additional diversification may help to better weather multiple markets.
- When it comes to considering fixed income in target date investments, our research shows that plan sponsors have different objectives for younger participants versus older participants. We explore how fixed income allocations can be designed to meet these multiple objectives and navigate the market environment through diversification.
Important: Hypothetical Data
The Nontraditional Bond modeled performance results reflect the deduction of investment advisory fees. Returns shown would be lower when reduced by any other expenses incurred in the management of an investment advisory account.
The information presented herein is hypothetical in nature and is shown for illustrative, informational purposes only. It is not intended to forecast or predict future events, but rather to demonstrate T. Rowe Price’s capability to manage assets in this style. This analysis includes historical data on the indicated strategy and model performance prior to strategy inception in February 2015. The modeled portfolio does not reflect actual returns and does not guarantee future results. Certain assumptions have been made for modeling purposes and are unlikely to be realized. No representation or warranty is made as to the reasonableness of the assumptions made or that all assumptions used in modeling analysis presented have been stated or fully considered. Changes in the assumptions may have a material impact on the information presented.
Model strategy results were developed with the benefit of hindsight and have inherent limitations. Model strategy results do not reflect actual trading. The model strategies do not reflect the impact that material economic, market or other factors may have on weighting decisions. If the weightings change, results would be different. Actual results experienced by clients may vary significantly from the hypothetical illustrations shown.
T. Rowe Price Capital Market Assumptions: The information presented herein is shown for illustrative, informational purposes only. Forecasts are based on subjective estimates about market environments that may never occur. This material does not reflect the actual returns of any portfolio/strategy and is not indicative of future results. The historical returns used as a basis for this analysis are based on information gathered by T. Rowe Price and from third- party sources and have not been independently verified. The asset classes referenced in our capital market assumptions are represented by broad-based indices, which have been selected because they are well known and are easily recognizable by investors. Indices have limitations due to materially different characteristics from an actual investment portfolio in terms of security holdings, sector weightings, volatility, and asset allocation. Therefore, returns and volatility of a portfolio may differ from those of the index. Management fees, transaction costs, taxes, and potential expenses are not considered and would reduce returns. Expected returns for each asset class can be conditional on economic scenarios; in the event a particular scenario comes to pass, actual returns could be significantly higher or lower than forecast.
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