At the beginning of the year, many advocated for the holding of bonds over equities due to interest rate predictions. During this short period, stocks have opened up a +10% gap from bonds.

2022 was one of the worst years for bond returns. Conservative investors with larger bond allocations in their portfolio would have suffered large paper losses in the face of the fastest interest rate hiking cycle in history. But these losses could mean additional future returns.

When the US Federal Reserve committed to raise interest rates in the face of rising inflation, investors and financial media like Bloomberg, Morningstar, and Yahoo Finance were quick to predict that bonds will underperform cash. Looking at over 30 years of International Government Bond data, we examine the validity of these forecasts.

We can’t dispute that rising costs and inflation are at our doorstep; we could however, argue against the claim that a doomsday outcome on stocks is certain whenever interest rates rise. Let’s see what the data has to say.

The issue of an investor buying the “wrong product” and losing significant amounts of capital as a result is not a new one. Do you know whether your advisor is committed to working in your interest?