Inflation, rate rises, war, and crises of various stripes: A lot has changed in the world since we published Preparing for the Big Shift, our 2021 fixed income survey.
Our latest research finds that while investors are indeed adapting their portfolios to the backdrop of inflation and rate hikes in the short term, there are deeper trends shaping the future state of fixed income portfolios.
1 See, for example, Fixed Income: Preparing for the Big Shift, State Street Global Advisors, 2021.
2 A YTD decline of 16.80%, as of June 30, 2022. Source: State Street Global Advisors.
3 640 bps, as of June 30, 2022. Source: State Street Global Advisors.
4 n=550. Only 12% of respondents disagreed with the statement.
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† This figure is presented as of June 30, 2022 and includes approximately $66.43 billion of assets with respect to SPDR
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In partnership with FT Longitude, a Financial Times company. This survey was conducted in May of 2022 via an online survey instrument (n=700) and telephone interviews (n=5). Respondents were limited to senior leaders and senior portfolio managers who are directly involved in fixed income portfolio construction and investment decisions at pension funds, wealth managers, asset managers, endowments, foundations and sovereign wealth funds.
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Bonds generally present less short-term risk and volatility than stocks, but contain interest rate risk (as interest rates raise, bond prices usually fall); issuer default risk; issuer credit risk; liquidity risk; and inflation risk. These effects are usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.
International Government bonds and corporate bonds generally have more moderate short-term price fluctuations than stocks, but provide lower potential long-term returns.
Investing in high yield fixed income securities, otherwise known as “junk bonds”, is considered speculative and involves greater risk of loss of principal and interest than investing in investment grade fixed income securities. These Lower-quality debt securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer.
Investing in foreign domiciled securities may involve risk of capital loss from unfavorable fluctuation in currency values, withholding taxes, from differences in generally accepted accounting principles or from economic or political instability in other nations.
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Exp. Date: 8/31/2024