Bonds in Question: Reassessing Fixed Income in Today’s Market

In this video, Brendan Malone turns Greenrock Research’s attention to a pressing challenge for investors: the shifting role of bonds in client portfolios. Once considered a safe cornerstone of allocation strategies, bonds are now under pressure from low yields, policy uncertainty, and uneven performance. Brendan discusses why fixed income may no longer deliver on its traditional promise—and what that means for portfolio construction going forward.

The Role of Bonds Has Changed

For decades, bonds offered relative safety and stability. But after the 10-year Treasury’s significant loss in 2022 and years of low yields, bonds can no longer be relied upon in the same way. What was once a dependable allocation has now become a difficult choice for portfolio construction.

A Challenging Environment for Yields

The recent back and forth between the Federal Reserve and the White House has only added uncertainty. While the 10-year Treasury is currently trading around 4.14%, that return falls short of meeting client investment needs. The possibility of additional yield from rate declines is uncertain—and ultimately a gamble.

Investors now face a difficult question:

• Is a 4% return enough to meet long-term objectives?
• Can additional yield be counted on from future rate declines?
• Or are bonds setting portfolios up for further disappointment?

The reality is that betting on lower rates is uncertain—and ultimately a gamble.

Lessons from History

The last time rates went to zero, during the Great Depression, bonds underperformed for four decades. Today, even after the Fed’s latest cut, rates have edged up slightly, leaving investors in a similar position: limited upside potential, with real risks if inflation persists.

A Broken Asset Class?

No one can predict exactly when rates will decline, or by how much. But waiting for that shift could leave clients exposed to continued underperformance. Bonds may no longer deliver the safety or returns that investors expect.

Key risks include:

• Modest returns that fall short of client needs
• Exposure to downside if inflation rises
• Uncertainty around timing and magnitude of rate changes

For many, it may be critical to reconsider fixed income allocations now rather than later.

Exploring Alternatives

At Greenrock, we have developed a solution that has provided higher returns than the 10-year Treasury with roughly the same level of volatility. For investors searching for consistency in a difficult bond market, this alternative offers a compelling path forward.

If you're interested in learning more—or simply want to start a conversation—please reach out.