The real risk for bonds,
especially at these low yield levels, will almost always come from inflation.
The duration that's relevent here is modified duration (spreadsheet function MDURATION), which is slightly lower than Macaulay duration (spreadsheet function DURATION), but the difference is small enough to ignore,
especially at low yields.
Not exact matches
Especially right now, with bond
yields at historic
lows, balanced portfolio returns are that much leaner.
Besides, while bonds certainly seem risky in that
at their current
low yields they're
especially vulnerable to rising rates, viewed from another angle they may be a lot more valuable than many investors realize.
At lower latitudes,
especially the seasonally dry tropics, crop
yields are likely to fall - even for small temperature increases, increasing the risk of hunger.
This suggests that NTRs may offer a better option for investors who are concerned about rich public REIT valuations that may overstate underlying asset value,
especially now, when traded REIT prices are
at historic highs and
yields are near historic
lows.
At times when the
yield spread was less than 80 basis points — when REIT dividend
yields were extraordinarily high, reflecting REIT stock prices that were
especially low relative to current distributions — REIT performance over the next year tended to be
especially strong, with total returns that averaged 20.81 percent and outpaced the broad stock market by 5.67 percentage points.
At times when the
yield spread was greater than 180 basis points — that is, when REIT dividend
yields were extraordinarily
low, reflecting REIT stock prices that were
especially high relative to their current distributions — REIT performance over the next year tended to be weak, with total returns that averaged 6.98 percent and underperformed the broad stock market by 1.84 percentage points.