Charts of the Week
Fixed Income Sector Performance (Total Return as of 3/31/19)
Chart of the Week for April 26, 2019 - May 2, 2019
The fixed income market includes many different types of securities, and their performance can vary substantially among these types. The chart above compares the performance of 11 major fixed income sectors for the one-year periods ended March 31, 2019 ("current year"-dark blue bars above) and March 31, 2018 ("prior year"-light blue bars above). Ten of the 11 fixed income sectors produced positive returns for both the current and prior years.
The U.S. Federal Reserve's Federal Open Market Committee ("FOMC") increased the target rate range for the federal funds rate three times during the current year, but the FOMC changed its messaging in early 2019 and would be "patient" with regard to further rate increases. During the current year, U.S. short-term rates rose while other rates generally fell, and long-term sectors outperformed short-term sectors. Long-Term Government led all sectors in current year performance (6.20%), as fourth quarter 2018 equity market volatility led investors to seek safe-haven securities. Global (-0.38%) was the only negative sector in the current year based on concerns such as Brexit, U.S. Dollar strength, and non-U.S. central bank monetary policies.
"Performance fluctuates over time and returns depend in part on the market environment, which is hard to predict. Changes in both actual and expected interest and inflation rates can materially impact fixed income investments. Also, investors should note that even U.S. Government securities can decline in value and investing in sectors such as High Yield or Emerging Markets involve additional risk.
When making investment decisions, prudent investors should invest based on their own circumstances, taking into consideration their goals, investment experience, time horizon, and risk tolerance."
Posted by: sarah_oz@yahoo.com
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