7 key questions investors should ask about owning bonds today

Over the past four years, bond prices have experienced unusually high levels of volatility, with yields falling to a record low during the start of the COVID-19 pandemic and then surging to multi-decade highs as high inflation forced the Federal Reserve and other central banks to tighten policy aggressively.

Despite the challenging environment, we believe this adjustment in yields has created opportunities for long-term investors. High-quality bonds can still offer valuable income and diversification benefits within a balanced portfolio.

Let’s revisit the case for bonds with some perspective on seven key questions:

 This chart shows the U.S. effective federal funds rate and the 10-year Treasury yield. After an aggressive rate-hiking cycle beginning in March 2022, the effective fed funds rate exceeds the 10-year Treasury yield.
Source: 10/31/2023. Past performance does not guarantee future results.

7 questions about bonds to consider

Investment Policy Committee

The Investment Policy Committee (IPC) defines and upholds Edward Jones investment philosophy, which is grounded in the principles of quality, diversification and a long-term focus.

The IPC meets regularly to talk about the markets, the economy and the current environment, propose new policies and review existing guidance — all with your financial needs at the center.

The IPC members — experts in economics, market strategy, asset allocation and financial solutions — each bring a unique perspective to developing recommendations that can help you achieve your financial goals.

Learn More

Important Information:

*Reinvestment risk is the risk that when a fixed-income security matures, investors may be required to reinvest the principal at a lower rate than the previous investment.

This is for informational purposes only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation. While the information is believed to be accurate, it is not guaranteed and is subject to change without notice.

Before investing in bonds, you should understand the risks involved, including credit risk and market risk. Bond investments are also subject to interest rate risk such that when interest rates rise, the prices of bonds can decrease, and the investor can lose principal value if the investment is sold prior to maturity.

Past performance does not guarantee future results.

Market indexes are unmanaged and cannot be invested into directly and are not meant to depict an actual investment.

Diversification does not guarantee a profit or protect against loss in declining markets.