Money Managers Are Asking Clients to Give the Bond Market Another Chance

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ti...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...

Bonds are selling off, but the classic 60-40 portfolio is doing what it is supposed to for the first time in years Wealth advisers and investment managers are trying to persuade their clients to embrace an asset class that many have grown to despise. They want investors to get back into bonds to take advantage of tempting yields. But it is a tall task after years of topsy-turvy returns. And it has only gotten harder with benchmark yields at the highest level in two dozen years, and prices inversely falling."The biggest challenge is going to be psychological," said Brian Spinelli, co-chief investment officer at wealth manager Halbert Hargrove. "When people think fixed income, they’re anchored to what it was when rates were near zero, but you’re in a different yield environment than you have been over the last 15 years."At the heart of the pitch is that bonds are doing what they are supposed to be doing, by at least one measure, for the first time in years. This year is on pace to be the first since 2021 that stock and bond prices have moved in opposite directions, according to data from the Leuthold Group, which is based on common benchmarks for each asset class. That is the cornerstone of the classic 60-40 portfolio, where a diversified portfolio of 60% stocks and 40% bonds cushions volatility, with one rising when the other falls. But bonds got a bad rap after the Federal Reserve quickly raised interest rates in 2022. Stocks and bonds fell in tandem, burning investors conditioned to think of bonds as their portfolio’s primary line of defense. Even though both rose in the following three years, many dumped bonds in favor of better-performing stocks. The S&P 500 is on pace to post double-digit returns for the fourth year in a row. Separately, retail-investor holdings of cash have been around record highs. The bond selloff this year has dragged on returns for people who already own them, but has allowed money managers to tout higher yields in fixed income. And there are signs that the tide is turning. Flows into bond funds this year to date have already outpaced those of every full year since 2021, according to Morningstar. John Ridilla and Sue Seeling-Ridilla, in Charlotte, N.C., are among those who see opportunity in the bond market these days. Their portfolio is about 80% fixed income, including Treasurys and certificates of deposit. A few years ago, it was 20% fixed income. The retired couple earns about $200,000 a year from their fixed income and Social Security, far more than the $90,000 a year they spend, Ridilla said."With the yields coming up, I’m actually thinking of moving some of the stocks into Treasurys and just living off the interest every six months," he said. Many advisers are recommending short- and intermediate-term maturities over longer-term ones. Some see rising bond yields as a reaction to a widening U.S. deficit or a sign that the market doesn’t trust the Federal Reserve to do what it takes to rein in inflation, which would hit longer-term debt. David Busch, chief investment officer of Trajan Wealth, has been investing in bonds with three- to five-year maturities. He sees these as a good alternative for those with a lot of cash parked in money-market funds, enabling them to lock in higher rates."The Fed is on a hiking trajectory," Busch said. "When it stops raising rates or they pause, clients that are holding cash will ride rates down just like they’re riding them up."Another move is to use a bond ladder that spreads investments among bonds with progressively later maturity dates, according to Collin Martin, head of fixed-income research and strategy for the Schwab Center for Financial Research."There’s always risks with bond investments where prices can decline," he said. But "we’re seeing income that you can earn that we haven’t seen in nearly two decades."

Many advisers who are looking past the price declines still see pitfalls in bonds. Some are concerned that stocks and bonds have both become too ...