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2015 Bond Scoresheet

U.S. fixed income has been lackluster so far this year as rate-hike worries have been offset by periodic flights to safety, but high yield should continue to outperform.

Dave Sekera: Returns across most domestic fixed-income instruments have been relatively lackluster this year. For example, the Morningstar Core Bond Index, which is our broadest measure of the fixed-income universe, has only risen less than one percent through the beginning of August.

After generally declining in 2014, long-term interest rates have struggled to find a consistent direction this year and have vacillated within a 1% trading range. Interest rates have been bound between the expectation that the Fed would begin to raise its federal funds rates in the second half of this year. That, in turn, has put upward pressure on Treasury yields; but this upward pressure has been offset by global and domestic economic concerns, which have then driven different bouts of risk-off and flight-to-safety portfolio re-allocations.