These may be rough days for fixed income investors, but portfolios still require balance
Fixed income investing remains relevant despite recent market challenges. While many investors have shifted focus to equities and alternative income sources, the importance of a balanced portfolio is underscored by the potential risks of market downturns. Understanding the role of fixed income can help mitigate losses and improve recovery times during equity sell-offs.
- ▪Fixed income is often misunderstood and has been overshadowed by equities and alternative investments.
- ▪A 15 percent decline in equities can lead to a much smaller overall portfolio decline if fixed income is included.
- ▪Investors have become conditioned to prioritize riskier assets, neglecting the protective benefits of fixed income.
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Open this photo in gallery:The TMX Market Centre in Toronto in September, 2024. When investing, a 15 per cent portfolio decline requires a subsequent gain of roughly 18 per cent just to get back to even, writes Kevin Foley.Paige Taylor White/The Canadian PressShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountFixed income isn’t a bad word. It has been hijacked by poor returns and shinier toys. Misunderstood. Rendered unattractive. Even made unwelcome.I know – I live it daily. I and others focused on fixed income see the eye rolls and the blank stares, yet here we are.At its core, fixed income exists to provide income and preserve capital: straightforward, if not precisely defined.
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Excerpt limited to ~120 words for fair-use compliance. The full article is at The Globe and Mail.
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