- When interest rates rise, many investors look to avoid some short-term pain by getting out of bonds – but this may not be a sound long-term strategy.
- While rising rates are bad for bond prices, they actually affect income positively, and bond income makes up a much greater part of the total return of a bond over the medium to long term.
- Bonds, like equities, experience periods of underperformance. Periods of equity underperformance have on average been both deeper and longer, and importantly, some of the more severe episodes have often come after a series of interest rate hikes.
All investing involves risk, including the risk of loss. There is no assurance that any investment will meet its performance objective or that losses will be avoided. The ability of an actively managed investment to achieve its objective will depend on the effectiveness of the portfolio manager.
Natixis Distribution, L.P. is a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.