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Common Misconceptions with Bonds

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With the 10 year Treasury yield hitting 3% in April during a steady increase in interest rates to start 2018, we believe taking a look at several common misconceptions investors have with fixed income would be helpful. The article “4 Big Myths About Bonds” by Allan S. Roth on Financial-Planning.com does a great job reframing how an investor should view bonds and their role in a portfolio.

 

Index Performance April YTD 1 Yr
US Stock (Russell 3000) 0.38% -0.27% 13.05%
Foreign Stock (FTSE AW ex US) 1.68% 0.53% 16.18%
Total US Bond Mkt. (BarCap Aggregate) -0.74% -2.19% -0.32%
Short US Gov. Bonds (BarCap Gov 1-5 Yr) -0.35% -0.74% -0.77%
Municipal Bonds (BarCap 1-10yr Muni) -0.28% -0.98% 0.26%
Cash (ICE ML 3Month T-Bill) 0.13% 0.49% 1.17%