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How Fixed Income Assets (Bonds) Have Performed So Far This Year

How Fixed Income Assets (Bonds) Have Performed So Far This Year

Everyone is concerned with interest rates going up at the moment. Let’s look at how fixed income asset class has performed so far this year (till March 2018). In short, the concerns of rising interest rates and widening credit spreads have lead to the underperformance in bonds across the board. However, high yields (junk bonds) have performed slightly better than the investment grades primarily due to better carry and smaller spread widening.

Long term bonds had the worst performance YTD and this is expected to continue as interest rates creeping up. In addition, credit spreads are also expected to rise from historical lows. All in all, these are not good news for bond investors in the near future unless they have the willingness and ability to hold to maturity (assuming to defaults) and just receiving the yield to maturity of the bonds.


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