Three Ways to Ramp Up Your Bond Portfolio
Home

Three Ways to Ramp Up Your Bond Portfolio

Time to read: Minutes
Christian Wilson

Christian Wilson, CFA

Head – Global Client Portfolio Management

With yields near 15-year highs, bonds have resumed their role in portfolios as a tool for potential income, compelling risk-adjusted returns and diversification. To help investors get their bond allocations back on track, we spotlight three bond strategies: intermediate, unconstrained and GNMA.

Bonds are back

After years in the desert of yield scarcity, fixed income is back in business as a competitive asset class. In the post — financial crisis era of extraordinarily low interest rates, investors had to reach down in credit quality or extend duration to generate meaningful yield. But as the Federal Reserve has ratcheted rates higher to combat inflation, the environment has changed decisively.

Across the credit quality spectrum, yields are significantly higher than they have been in more than a decade (Exhibit 1). Investors can now get better yields from Treasury bonds than they could from junk bonds just two years ago. That higher yield translates to several potential benefits: an extra cushion against falling bond prices if rates continue to rise, a relatively stable source of return, and the prospect of attractive long-term performance. (Historically, the yield of the U.S. Agg — currently 4.4% as of April 30 — has been a good indicator of returns over the next five years.1 ) Against this backdrop, we believe bonds are well positioned to help investors diversify equity and credit risk.

Exhibit 1. Investors no longer need to reach down in credit quality for attractive yield
U.S. Yields by Credit Quality, 2012–2023
1

As of 04/30/23. Source: Bloomberg Index Services Limited, Voya Investment Management. Treasury: Bloomberg U.S. Treasury Index; AA–BBB: Bloomberg U.S. Corporate Aa, A and Baa subindices; BB-B: Bloomberg U.S. High Yield Corporate 2% Issuer Cap Ba and B subindices. Dashed lines represent yield for BBB and Treasury bonds at 04/30/23.

fixed income strategies

Investing with Voya Investment Management

Voya IM has extensive expertise across fixed income markets to help investors achieve their objectives.

  • Investments guided by collaboration among 250+ fixed income investment professionals
  • A strong leadership group headed by Matt Toms, Global Chief Investment Officer
  • Portfolio management decisions supported by deep fundamental research from experienced sector specialists plus macro and quantitative group

 To learn more about our investment solutions, contact your Voya IM representative or visit https://advisors.voya.com/backintobonds

Related Products

Voya Intermediate Bond Fund

Voya Strategic Income Opportunities Fund

Voya GNMA Income Fund

Tags:
Investment Insights
IM2889076

1 Voya’s analysis of rolling periods for the Bloomberg U.S. Aggregate Bond Index from 1976 to 2022 showed that the Agg’s future 5-year returns and starting yield to worst had an r2 of 0.89.

This commentary has been prepared by Voya Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) interest rate levels, (4) increasing levels of loan defaults, (5) changes in laws and regulations and (6) changes in the policies of governments and/or regulatory authorities. Past performance is no guarantee of future returns.

An investor should consider the investment objectives, risks, charges and expenses of the Fund(s) carefully before investing. For a free copy of the Fund’s prospectus, or summary prospectus, which contains this and other information, visit us at www.voyainvestments.com or call (800) 992-0180. Please read the prospectus carefully before investing.

The opinions, views and information expressed in this commentary regarding holdings are subject to change without notice. The information provided regarding holdings is not a recommendation to buy or sell any security. Fund holdings are fluid and are subject to daily change based on market conditions and other factors.

Top