Home Guides & Resources chevron_right Investing Are Bonds Still a Safe Haven? Published November 12, 2020 https://www.adviserinvestments.com/wp-content/uploads/qw1020-are-bonds-still-a-safe-haven.mp3 Is it still worth holding bondsA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. with interest rates as low as they are? Portfolio Manager Charlie Toole discussed our view on bonds in a low-rate environment in our recent webinar,* Looking Beyond the Election to the Recovery’s Future. Please enjoy the excerpt below and click here for the full webinar replay to hear more. * * * * * Charlie Toole: Current interest rates are very low—that points towards low returns in the future. We’ve seen interest rates fall this year to new record lows, but despite those low rates, bonds still act as a safe haven. I will caution that not all bonds—not all interest-bearing investment vehicles—are safe havens. There are a number of different factors that influence the price movements of a bondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates.. One of the most important factors is the credit rating. That is a rating on how financially strong and financially stable the institution that’s issuing the bond is, whether it’s a government or a corporation. The higher the rating, the better the financial standing. Typically, higher-rated bonds act as a safe haven when stocksA financial instrument giving the holder a proportion of the ownership and earnings of a company. are falling. Even in this low-interest-rate environment, I still think that’s the case. * * * * * Click here for a replay of Looking Beyond the Election to the Recovery’s Future. Please contact us at (800) 492-6868 to learn more about comprehensive wealth management solutions. *Webinar recorded after the market closed on Wednesday, October 28, 2020. Disclaimer: This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Our statements and opinions are subject to change at any time, without notice and should be considered only as part of a diversified portfolio. Mutual funds and exchange-traded funds mentioned herein are not necessarily held in client portfolios. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. You may request a free copy of the firm’s Form ADV Part 2A, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs. © 2020 Adviser Investments, LLC. All Rights Reserved.