While fixed income strategists have called for rising rates in nearly every year since the financial crisis, 2018 has marked one of the worst starts for bond investors since 1996. With 10-year rates up, many investors are questioning what if any changes they should be making to their portfolios.
Over the last 11 years, the three-month investment window from February 1 through April 30 has, on average, produced the strongest returns for EM assets, in particular EM local debt and EM equities, and generated the fewest and the smallest shortfalls.
As we’ve highlighted over the last several weeks, investors should be taking a closer look at their bond portfolios and determining if allocations to the Barclays U.S. Aggregate Index (Agg) are consistent with their investment objectives. In our view, while the Agg provides a time-tested barometer for fixed income performance, as an investment strategy, the approach is suboptimal.