The Importance of Diversification in Fixed Income Today

Investors are picking themselves up in 2019 after a tumultuous way to end 2018. The Dow Jones Industrial Average fell 5.6 percent, while the S&P 500 was down 6.2 percent and the Nasdaq Composite declined 4 percent.

2018 marked the worst year for stocks since 2008 and only the second year the Dow and S&P 500 fell in the past decade. In 2019, investors are no doubt reassessing their strategies for how to distribute their capital through the rest of the year.

The end of 2018 also spurred a move to bonds as investors sought after safe-haven alternatives amid the volatility. With that being said, as more investors begin to add fixed income to their portfolios, it will take more of a strategic bent to derive its benefits, such as diversification.

This is especially so since the Federal Reserve said during its fourth and final rate hike in December 2018 that it will do more reassessing, which could mean lesser rate hikes in store for 2019. With the short-term strategy of lesser rate hikes in store, the long end of the curve, however, is much less clear.

As such, investors will need more guidance for their fixed-income portfolios.

In these short video clips, you’ll hear from Dan Chornous, RBC GAM’s Chief Investment Officer, and Dagmara Fijalkowski, Head, Global Fixed Income & Currencies on some of the questions most frequently asked about fixed income.

For more investment strategies, visit ETF Trends.