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The New Fixed Income Regime

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US fixed income investors endured years of low yields after the Great Recession of 2008–09, followed by widespread bond market declines in 2021–22. This environment limited the appeal of fixed income securities for many investors. In fact, many Wall Street strategists and financial journalists used the acronym TINA (There Is No Alternative) to describe how portfolios were almost forced to overweight equities for the entire decade of the 2010s and into the early 2020s. Tapping into reliably solid bond returns just wasn’t an option during this TINA period.

TINA Dumped for TARA?

While the Federal Reserve interest rate hiking campaign (since March 2022) brought short-term pain and frustrating losses to bond investors, this effort also elevated yields from historically meager levels. (Remember that bond prices and yields have an inverse relationship.) One fixed income expert even declared that TINA—the acronym that suggests “There Is No Alternative” to stocks—has been ditched for TARA (There Are Realistic Alternatives). The alternatives referenced by TARA are fixed income securities. This change could invite a potential shift in investor allocations, so we want to explore the possibility of a new environment for bonds and answer key questions, namely:

• What’s the historical evidence to indicate that bonds may be revitalized now that the Federal Reserve has likely stopped raising interest rates for this cycle?
• Why do certificates of deposit (CDs), savings accounts, and money market not offer the upside return potential of bonds when interest rates fall?
• Can duration and convexity create risk/return asymmetry in fixed income markets?
• What are the investment opportunities available for advisors to help their clients navigate the new fixed income regime?

This paper will provide useful background information, insightful illustrations, and practical portfolio management insights.


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The information, analysis, and opinions expressed herein are for general information only. Nothing contained in this document is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Investing carries certain risks and there is no assurance that investing in accordance with the portfolios or strategies mentioned will provide positive performance over any period of time. Investors could lose money if they invest in accordance with the portfolios or strategies discussed herein. Past performance is not indicative of future results.


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