2020 has been a challenging environment for bond investors. Beginning in the second half of 2019, the 10-year Treasury yield started to decline and reached historically lows levels March of this year (below 1%). In light of the Covid-19 pandemic and Federal Reserve actions, 10-year Treasury yields remain suppressed in a range of 0.50% to 0.75%, and are near zero, or worse, when adjusted for inflation. Despite these challenges, we know bonds have a place in a well-diversified portfolio.

We’ve heard questions from clients over the last few months about why they should still own bonds. Why don’t I just hold cash right now, or should I be reaching for yield in lower-credit-quality investments?

While both of these options might seem tempting, we continue to believe high-quality bonds should serve as the core of your fixed income allocation. In many of these conversations we’ve communicated three key points as reasons to hold bonds today (and into the future):

Where do you go from here?

Don’t give up on your fixed income holdings because of the low yields they currently offer. Consult with your financial professional to make sure you own the right bonds for the today’s environment. Fixed income shouldn’t be a one size fits all solution. Dana’s fixed income solutions are built from the ground up to meet the client’s cash flow needs and fit in with their larger asset allocation puzzle. If you are troubled by the low yields, please contact us at info@danainvestment.com to learn more about our offerings.

Disclosure: Dana Investment Advisors welcomes any comments to their blog and is more than willing to discuss or explain any aspect of it. This blog is provided for general information only and is not intended to provide specific advice or recommendations for any individual or entity. This is not an offer, solicitation, or recommendation to purchase any security or the services of any organization or individual. The foregoing reflects the opinions of Dana Investment Advisors.