In the bond market, interest rates were flat for the week and high-yield bonds outperformed Treasury securities. Our overweight to corporate bonds was beneficial in that environment.
PROTECT: Risk Assist
Global investors expressed some uncertainty last week as they waited for France’s first-round presidential election vote to take place on Sunday, causing markets to churn. In general, hedges in equities and currencies were being put in place ahead of that vote. The Risk Assist portfolios took no hedging actions during the week, however, as nothing materially changed in the financial markets regarding risk.
SPEND: Real Spend
Although interest rate volatility has increased lately, market expectations for inflation have remained relatively stable—a surprising development, as interest rates and inflation expectations typically move in tandem.
During the past year, U.S. stocks have outperformed U.S. bonds by more than 12 percentage points. This large spread further reinforces our conviction that equity-focused retirement income portfolios can help to generate the returns needed to combat longevity risk during retirement.