Charts of the Week
Fixed Income Sector Performance (Total Return as of 6/30/19)
Chart of the Week for July 26, 2019 - August 1, 2019
The fixed income market includes many different types of securities, and performance can vary substantially among these types. The chart above compares the performance of eleven major fixed income sectors for the 1 year periods ended June 30, 2019 ("current year") and June 30, 2018 ("prior year"). Positive returns occurred in all 11 of the fixed income sectors for the current year. In contrast, six of the 11 sectors produced positive returns in the prior year.
Sector returns were positive in the current period as U.S. rates fell across all maturities. The U.S. Federal Reserve Board left the target rate range for the Fed Funds rate unchanged in the first two quarters of 2019 and indicated their next move may be to cut rates. Long-Term Corporate (15.19%) and Long-Term Government (12.28%) were the best performing sectors shown in the current year, as Long-Term outperformed Short-Term in both sectors. Tightening credit spreads helped Corporate and High-Yield bonds across all maturities. Emerging Markets (10.95%) and Global (5.85%) returns were positively impacted by monetary policy easing in Europe and several emerging market countries amid signs of slowing global growth and continued concerns about U.S.-China trade policy.
Performance fluctuates over time and 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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