Bonds Starting To Offer More Diversification

Russ Koesterich, CFA 3.62K Follower s Follow 5 Share Save Play ( 4min ) Comments Summary Bonds, once viewed as a reliable hedge against risk, took on the role of risk accelerator since 2021, as inflation shifted traditional stock/bond correlations from negative to positive. This trend is now showing signs of a reversal. As inflation has slowed in recent years, it has also become less volatile. With anticipation of further Fed easing and likely expansion of the central bank’s balance sheet, I believe that bonds could once again fill the role of a traditional portfolio diversifier. Andrii Yalanskyi/iStock via Getty Images For the better part of 20 years, bonds offered little yield but effective diversification. From the aftermath of the internet bubble through the pandemic, stock/bond correlations were consistently negative, making a Treasury bond an effective portfolio hedge. This article was written by Russ Koesterich, CFA 3.62K Follower s Follow Russ Koesterich, CFA, JD, Managing Director and portfolio manager for BlackRock’s Global Allocation Fund, is a member of the Global Allocation team within BlackRock's Multi-Asset Strategies Group. He serves as a member of BlackRock's Americas Executive Committee. Mr. Koesterich's service with the firm dates back to 2005, including his years with Barclays Global Investors (BGI), which merged with BlackRock in 2009. He joined the BlackRock Global Allocation team in 2016 as Head of Asset Allocation and was named a portfolio manager of the Fund in 2017. Previously, he was BlackRock's Global Chief Investment Strategist and Chairman of the Investment Committee for the Model Portfolio Solutions business, and formerly served as the Global Head of Investment Strategy for scientific active equities and as senior portfolio manager in the US Market Neutral Group. Prior to joining BGI, Mr. Koesterich was the Chief North American Strategist at State Street Bank and Trust. He began his investment career at Instinet Research Partners where he occupied several positions in research, including Director of Investment Strategy for both U.S. and European research, and Equity Analyst. He is a frequent contributor to financials news media and the author of two books, including his most recent "The Ten Trillion Dollar Gamble."Mr. Koesterich earned a BA in history from Brandeis University, a JD from Boston College and an MBA from Columbia University. He is a CFA Charterholder.

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