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Investors may want to think twice before ditching bonds when the Federal Reserve (Fed) is hiking interest rates. Over the last 95 years, bonds have had positive annual returns 85% of the time. Moreover, they’ve posted positive returns in a variety of interest-rate environments—even during periods of Fed rate-hiking cycles. 

 

Long-Term Bond Returns (1926-2021)

  -10 to -5% -5 to 0% 0 to 5% 5 to 10% 10 to 15% 15 to 20% >20%
  1969  -8.09 2021  -1.54 2018  0.01 2020  7.51 2002  10.26 1995  18.47 1985  22.10
  1956  -6.81 2013  -2.02 2017  3.54 2019  8.72 2000  11.63 1991  16.00 1982  32.62
    1999  -0.82 2016  2.65 2014  5.97 1989  14.53 1986  15.26  
    1994  -2.92 2015  0.55 2011  7.84 1975  14.64 1984  15.15  
    1974  -3.06 2012  4.21 2010  6.54 1971  11.01 1976  15.60  
    1967  -4.95 2006  4.33 2009  5.93 1934  13.84 1970  18.37  
    1965  -0.46 2005  2.43 2008  5.24 1933  10.38    
    1959  -0.97 2004  4.34 2007  6.97 1932  10.82    
    1958  -2.22 2003  4.10 2001  8.44      
    1951  -2.69 1996  3.63 1998  8.69      
    1947  -2.34 1987  2.76 1997  9.65      
    1931  -1.85 1980  2.71 1993  9.75      
      1979  1.93 1992  7.40      
      1978  1.39 1990  8.96      
      1977  3.04 1988  7.89      
      1973  1.14 1983  8.36      
      1968  2.57 1981  6.25      
      1966  0.20 1972  7.26      
      1964  4.77 1962  7.95      
      1963  2.19 1960  9.07      
      1961  4.82 1957  8.71      
      1955  0.48 1954  5.39      
      1953  3.41 1938  6.13      
      1952  3.52 1936  6.74      
      1950  2.12 1935  9.61      
      1949  3.31 1930  7.98      
      1948  4.14 1927  7.44      
      1946  1.72 1926  7.37      
      1945  4.08        
      1944  4.73        
      1943  2.83        
      1942  2.60        
      1941  2.73        
      1940  3.39        
      1939  3.97        
      1937  2.75        
      1929  3.27        
      1928  2.84        
Frequency of
Range Return
2% 13% 40% 29% 8% 6% 2%

            Fed Rate Hikes (Since 1971)

Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. For illustrative purposes only. Bonds are represented by the IA SBBI US Long-Term Corporate Index from 1926-1975 and the Bloomberg US Aggregate Bond Index from 1976-2021. See below for index definitions.

Even With Bad Starts, Bonds Can Still Find Their Footing

Historically, when bonds began the year with a loss of 2% or more in the first five months, they still finished the year with positive results. 

Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. For illustrative purposes only. Bonds are represented by the IA SBBI US Long-Term Corporate Index from 1926-1975 and the Bloomberg US Aggregate Bond Index from 1976-2022. 

Talk to your financial professional about how you can prepare for today’s rising-rate environment. 

 

IA SBBI US Long-Term Corporate Index measures the performance of US dollar-denominated bonds issued in the US investment-grade bond market, including US and non-US corporate securities that have at least 10 years to maturity and a credit rating of AAA/AA.

Bloomberg US Aggregate Bond Index is composed of securities from the Bloomberg Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index, and Commercial Mortgage-Backed Securities Index.

“Bloomberg®” and any Bloomberg Index are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by Hartford Funds. Bloomberg is not affiliated with Hartford Funds, and Bloomberg does not approve, endorse, review, or recommend any Hartford Funds product. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to Hartford Fund products.

Investing involves risk, including the possible loss of principal. For illustrative purposes only.

CCWP121 2229643

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