PLANADVISER - September/October 2019 - 48
investment-oriented
Is Fixed Income Working?
For older participants, advisers should find investments that avoid volatility
T
he current state of the fixed-income markets presents
a puzzle to participants, plan sponsors and advisers.
According to conventional thinking, people saving to
fund their retirement should shift their emphasis from
stocks to bonds as a way to reduce risk and to generate a
higher level of income to live on, observes Tim Swanson,
chief investment officer (CIO) of Compass Financial Partners
LLC, an advisory firm headquartered in Greensboro, North
Carolina. " In this environment, though, with interest rates
so low, there's an argument to be made that fixed income is
not fulfilling either of those roles, " he says.
Interest rates are cyclical creatures, and at some point
they are likely to stand far higher than they do today. But
the accompanying chart demonstrates the dark side of the
cycle, plotting the yield of the 10-year Treasury note from
1962 through the present. In 34 of those 57 years, the 10-year
yielded above 5% although for only a few select months in
the current century, the last one being July 2007. Today, it
trails inflation, at about 1.5%.
Older participants seeking to avoid the volatility of equities
need to invest somewhere, and, in a retirement plan
context, the only viable option is fixed income. Bond vehicles
suitable for defined contribution (DC) plans come in many
varieties: domestic or international; short term or long term;
safe or speculative. For investors dedicated to target-date
funds (TDFs), managers handle the tough questions of maturity
and risk, as well as the transition through time.
Within the fund lineup, most plans provide a stable value
or money market option, with short maturities and yields to
match but little risk to principal. Also prevalent are funds
following core strategies tracking the Bloomberg Barclays
Aggregate U.S. Bond Index, a broad range of government
and corporate bonds, all of high quality. Core plus strategies
cast the net more widely, to capture the higher expected risk
48 | planadviser.com September-October 2019 Art by James Yang
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PLANADVISER - September/October 2019
Table of Contents for the Digital Edition of PLANADVISER - September/October 2019
Addressing Profitability
2019 PLANADVISER Retirement Plan Adviser Survey
2019 PLANADVISER National Conference
Is Fixed Income Working?
The Health Savings Alphabet
SEC Issues Proxy Guidance
Class Certification
An 'IPS' Sets The Standard
PLANADVISER - September/October 2019 - Cover1
PLANADVISER - September/October 2019 - Cover2
PLANADVISER - September/October 2019 - 1
PLANADVISER - September/October 2019 - 2
PLANADVISER - September/October 2019 - 3
PLANADVISER - September/October 2019 - 4
PLANADVISER - September/October 2019 - 5
PLANADVISER - September/October 2019 - 6
PLANADVISER - September/October 2019 - 7
PLANADVISER - September/October 2019 - 8
PLANADVISER - September/October 2019 - 9
PLANADVISER - September/October 2019 - 10
PLANADVISER - September/October 2019 - 11
PLANADVISER - September/October 2019 - 12
PLANADVISER - September/October 2019 - 13
PLANADVISER - September/October 2019 - 14
PLANADVISER - September/October 2019 - 15
PLANADVISER - September/October 2019 - 16
PLANADVISER - September/October 2019 - 17
PLANADVISER - September/October 2019 - 18
PLANADVISER - September/October 2019 - 19
PLANADVISER - September/October 2019 - Addressing Profitability
PLANADVISER - September/October 2019 - 21
PLANADVISER - September/October 2019 - 22
PLANADVISER - September/October 2019 - 23
PLANADVISER - September/October 2019 - 24
PLANADVISER - September/October 2019 - 25
PLANADVISER - September/October 2019 - 26
PLANADVISER - September/October 2019 - 27
PLANADVISER - September/October 2019 - 2019 PLANADVISER Retirement Plan Adviser Survey
PLANADVISER - September/October 2019 - 29
PLANADVISER - September/October 2019 - 30
PLANADVISER - September/October 2019 - 31
PLANADVISER - September/October 2019 - 32
PLANADVISER - September/October 2019 - 33
PLANADVISER - September/October 2019 - 34
PLANADVISER - September/October 2019 - 35
PLANADVISER - September/October 2019 - 36
PLANADVISER - September/October 2019 - 37
PLANADVISER - September/October 2019 - 38
PLANADVISER - September/October 2019 - 39
PLANADVISER - September/October 2019 - 2019 PLANADVISER National Conference
PLANADVISER - September/October 2019 - 41
PLANADVISER - September/October 2019 - 42
PLANADVISER - September/October 2019 - 43
PLANADVISER - September/October 2019 - 44
PLANADVISER - September/October 2019 - 45
PLANADVISER - September/October 2019 - 46
PLANADVISER - September/October 2019 - 47
PLANADVISER - September/October 2019 - Is Fixed Income Working?
PLANADVISER - September/October 2019 - 49
PLANADVISER - September/October 2019 - The Health Savings Alphabet
PLANADVISER - September/October 2019 - 51
PLANADVISER - September/October 2019 - 52
PLANADVISER - September/October 2019 - 53
PLANADVISER - September/October 2019 - SEC Issues Proxy Guidance
PLANADVISER - September/October 2019 - Class Certification
PLANADVISER - September/October 2019 - An 'IPS' Sets The Standard
PLANADVISER - September/October 2019 - Cover3
PLANADVISER - September/October 2019 - Cover4
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