I’ve always felt that being a defenseman is the toughest job on a hockey team. Forwards score most of the goals, and goalies can steal the show with a few timely saves, but fans rarely notice a defenseman until he makes a mistake. Bonds get that same lack of respect from investors: everyone seems to forget the times they provided a safety net when stocks plummeted, but if they lose a few percentage points they get kicked to the curb.
Part of the problem is that bonds can be difficult to understand. So in my latest podcast, I devote the full episode to answering common questions about the asset class investors love to hate.
I previewed this episode in my last post about why bond prices fall when rates rise, and I’ll continue with a series of blog posts that expand on some of the other issues discussed in the podcast:
If you started investing in bond ETFs about three years ago, chances are good that your holding is showing a loss on your brokerage statement. So you might be surprised to learn that broad-based bond index funds returned close to 4% annually over the three years ending March 31.