Summary

• The reset in global bond yields in the early 2020s established a foundation for the return fixed income investors can earn just from being exposed to the broader market.
• A fixed income allocation built solely from the traditional building blocks of certain DM bonds – investment grade credit, high yield, securitized assets – can constrain return potential by limiting the opportunity set.
• The case for global bond allocations rests largely on diversification.

In a world of high starting yields and rupturing economic alliances, investors who actively diversify across regions, sectors, and currencies can be better positioned to pursue durable returns.

Key takeaways

• Elevated starting yields can help