Quick Takes: Why Short-Term Bonds Are Especially Defensive Today

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Quick Takes: Why Short‑Term Bonds Are Especially Defensive Today

In this video, Andrew Wittkop, executive vice president and portfolio manager, discusses the merits of short- duration strategies for investors concerned about rising interest rates and increased volatility.

Further insights: Learn five reasons why the front end of the U.S. bond market may provide investors a good balance of liquidity, capital preservation and income in a rising rate environment.

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Disclosures

Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed.

There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision.