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.

In early April, investment strategists and the financial media were buzzing with what they determined to be a recession signal. In this data-rich world, we find ourselves asking, this yield-curve-inversion, is it important?

Strategies which reach for yield often lead to heightened volatility and magnified losses during times of market stress, and if emotions get the better of them, investors will inadvertently sell the assets at the worst possible time.

Bonds are primarily meant to stabilise your portfolio and provide a buffer during volatility. Buying them for returns or yield can be dangerous and expose you to hidden risks.