17 July 2019

Key Bond Index Gets Bitten

Share This Story

The guiding star for many bond investors is starting to flicker.

The Barclays U.S. Aggregate Bond Index, known as "the Agg"—which tracks the broader debt market the way the Standard & Poors-500 follows stocks—declined 0.12% in the first quarter, its first negative return in that period since 2006.

And with many large investors yanking funds tied to the Agg, the index's flagging popularity is having repercussions for how hundreds of billions of dollars are allocated in fixed-income portfolios.

The move is perhaps the most stark indication yet that the safest bonds are scaring investors.

A prime reason for the Agg's changing fortunes is that U.S. Treasurys and government-backed mortgage debt have gained a larger share of the index, following several years of record U.S. debt issuance.

Treasurys, long the gold standard of the debt markets, have in recent years lost their allure as income-starved investors favor riskier, higher-yielding securities such as "junk" bonds and loans.

Since 1976, the Agg has posted an annualized return of 7.68%.

To read more of this article click here.  

Join Our Online Community
Join the Better Way To Retire community and get access to applications, relevant research, groups and blogs. Let us help you Retire Better™
FamilyWealth Social News
Follow Us