Is your bond portfolio vulnerable to rising rates?

Although current interest rates are at all-time lows, eventually they could rebound.

Because the value of existing bonds tends to decrease when interest rates increase, investment portfolios overweighted to fixed-income assets could see significant losses should rates rise.

Consider investing in equities

The chart below shows how rising rates on the 10-year Treasury bond would have affected different hypothetical portfolio allocations during the past 20 years, when rates increased seven times. In those years when interest rates rose, the 100% bond portfolio returned little more than 2% on average, while the pure stock portfolio returned an average of 17%.

Adding even a small portion of stocks to a bond portfolio can increase returns significantly.


Sources: Bloomberg, SPAR, FactSet Research Systems Inc. Hypotheticals assume quarterly rebalancing.

Write a comment

Comments: 1
  • #1

    writing a college application essay (Monday, 09 October 2017 12:42)

    I am getting new bond for portfolio vulnerable to rise rates on investments. Then you will learn the following articles for writing more stories. So they are happy to provided content writing reviews.

Share on StockTwits