The Opportunity Cost of Waiting for Goldilocks
Waiting for a “Goldilocks moment” to add duration back into your portfolio can be costly and difficult to execute. Find out why allocating across duration exposures, or “riding the curve,” may offer a better approach.
Key takeaways
- The impact of the U.S. Federal Reserve’s rate-hike campaign and a strongly inverted yield curve has led investors to seek refuge on the very front end of the yield curve.
- Wary investors may be waiting for a “Goldilocks moment” to add duration back into their portfolios, but market timing can be difficult to execute.
- Investors who concentrate in short-duration allocations until rates begin to fall have historically realized high opportunity costs.
- Allocating across duration exposures, or “riding the curve,” can offer diversification and potential return benefits as the yield curve normalizes.
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