Yield Advantage: Riding the Curve
Global bond investors can use three basic principles to manage risk in 2024: diversify duration exposure, prioritize flexibility, and use generous real yields to build potentially inflation-beating income streams.
Key takeaways
- A relatively flat yield curve reduces the opportunity cost of extending or shortening duration, but it increases the risk of being too concentrated in one part of the curve.
- Implementing many small decisions across multiple sectors and maintaining investment flexibility is preferable to investing based on one big macro view.
- High nominal yields and generous real yields create an opportunity to build durable, inflation-beating cash flow streams over the coming years.
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