Historically, the job of the bond allocation was to buffer investors from periodic swings in equities and to provide some modest income they could harvest and spend. But it’s a new world for bonds, with historically low yields and rates that may have nowhere to go but up.
This paper reviews some of the questions bond investors are asking today (about the prospect of rising rates, inflation and lower bond returns overall) and considers whether and how the fixed income allocation should evolve going forward.
Specifically, we look at a category of fixed income that we define as “alternative credit” and examine its characteristics—and its potential appeal—for investors who are rethinking their fixed income allocation.
The paper can be downloaded here, or via the “Insights & Learning” section of the CFA Institute website here, where Continuing Education (CE) credit is available.