Seeking diversification to help mitigate the effect of volatility on their portfolios, investors often consider REITs, commodities, and hedge funds, but overlook high-quality bonds, which just might be the Rodney Dangerfields of the investment world. They don’t get any respect.
This chart demonstrates various investments’ track records during turbulent periods for equity markets. By sorting monthly equity returns into deciles and examining the worst periods, we find that high-quality bonds have proved to be one of the best diversifiers for a portfolio.
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