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Who Needs Bonds Anyway?
Article

Who Needs Bonds Anyway?

They don’t pay much interest, and future price appreciation is so not happening. Still, they have their uses.

Larry Light
Chief Investment Officer, 2020
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Editorial Rating

8

Qualities

  • Analytical
  • Overview
  • Background

Recommendation

Low interest rates have become the new normal since the Great Recession, and central bankers have signaled their intention to keep rates low for a long time to come. Negative-yielding debt around the world exceeded $17 trillion in November 2020, yet investors flocked to bonds for safety during the COVID-19 pandemic. With interest rates at rock bottom, investors can no longer depend on sovereign and high-quality fixed-income instruments for returns. Financial journalist Larry Light looks at what the future holds for bonds in this informative report.

Take-Aways

  • The US Federal Reserve’s low interest rate posture has contributed to falling bond yields in the credit markets.
  • Bonds continue to serve an important role as safe assets during times of financial distress.
  • Investors can still find returns in fixed-income securities.

About the Author

Larry Light is the markets editor at Chief Investment Officer magazine. 

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