There’s No Playbook for a Year Like 2020

There is no textbook response to a decade of historically low interest rates and a global pandemic. That fact is abundantly clear in the results of our study.

For the 80 institutional investors taking part in the study, fixed income represents about one-third of overall portfolios. Each of these institutions is responding to one of the most challenging bond market environments on record in their own unique way, based on their organizational mission, their economic and financial situations and their investment strategies and approaches.

The one thing these institutions do have in common is a deep concern about yields. By a wide margin, study participants cite falling yields as the most important factor in fixed income markets today, followed by two other factors also related to historically low interest rates and yields—government fiscal stimulus and monetary intervention by the Fed in the wake of the COVID-19 crisis.

Although these conditions have lowered expected returns on fixed income, the institutions make clear that these challenges have not caused them to change their fundamental approaches. Despite low yields, a global pandemic and social unrest, they are sticking to their long-term investment goals, strategies and risk management practices.