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ETF Specialist

Why Bonds Still Matter

Low yields and the potential for rising inflation notwithstanding, bonds are still valuable within a diversified portfolio.

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A version of this article previously appeared in the April 2021 issue of Morningstar ETFInvestor. Click here to download a complimentary copy.

Today’s bond market is characterized by low yields, tight credit spreads, and the potential for rising inflation. Value is difficult to find in bonds, but that doesn’t mean they don’t offer value in investors’ port­folios. Here, I review the current state of the bond market, detail why a core bond position is still valu­able, and spotlight a pair of bond exchange-traded funds that might add some value back to a core bond position.

Neal Kosciulek does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.