Global asset returns in 2022 are among the worst on record. A 50/50 equity and bond portfolio has resulted in the worst year-over-year (YOY) real returns since 1974, and the drawdown in global fixed-income markets has been simply unprecedented. We're facing our first global bond bear market in 70 years; the YOY nominal returns of GDP-weighted global government bonds is -20%. The last nine months of bond returns have wiped out the last 10 years of profit.
Important Risks: Investing involves risk, including the possible loss of principal. • Fixed-income security risks include credit, liquidity, call, duration, event, and interest-rate risk. As interest rates rise, bond prices generally fall. • US Treasury securities are backed by the full faith and credit of the US government as to the timely payment of principal and interest. • Investments in high-yield (“junk”) bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities. • Municipal securities may be adversely impacted by state/local, political, economic, or market conditions. Although municipal securities are generally exempt from federal income taxes, investors may be subject to the federal Alternative Minimum Tax as well as state and local income taxes. Capital gains, if any, are taxable. • Diversification does not ensure a profit or protect against a loss in a declining market.
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