Dividends4Life: Returns on Bonds Have Come and Gone

Returns on Bonds Have Come and Gone

Posted by D4L | Friday, February 11, 2011 | | 0 comments »

Bill Gross is an incredibly insightful and talented fixed-income manager and strategist. He could have just as easily titled his latest commentary to be "Pick Your Poison." According to the newsletter, Gross hopes to be able to achieve a 4% to 5% taxable rate of return this year by taking credit and currency risk (corporate and emerging market risk) and avoiding duration (interest rate risk).

It will be difficult for fixed-income investors to make any reasonable rates of return this year (and perhaps for the foreseeable future) if rates begin a secular trend toward higher yields. This makes life for investors difficult trying to find "safe" returns (ask anyone who has held a municipal bond since November how "safe" they feel), and it effectively forces all investors to embrace some type of risk if they hope to achieve a rate of return from what used to be considered their "safety net".

Source: The Street

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