Regain your balance with bonds

What you need to know:
4Q 2017

Despite diversification efforts, most portfolios are actually riskier than their benchmarks.

Despite diversification efforts, most portfolios are actually riskier than their benchmarks.

Political and policy risks are plentiful

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Investors need to carefully diversify risks

Investors need to carefully diversify risks to provide adequate protection when volatility spikes.

What’s happening: Your portfolio may be riskier than you think.

Portfolio risk

The cause: inadequate risk diversification.

Too much equity, credit or interest rate risk can undermine your investment goals. In order to balance risk effectively, it’s important to understand what’s on your plate. Be sure that the components of your portfolio complement each other to manage volatility and bring you closer to your goals. Find out if you have hidden risks in your bond portfolio.

Take action: Diversify risks effectively.

Your diversification needs will differ based on whether your portfolio is more heavily weighted in equity or fixed income investments.

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Portfolio heavy weighted in equities

How can you diversify equity risk?

With high-quality bonds. Core bonds and municipals can help protect your portfolio in an equity market pullback.

Bonds delivered when stocks didn’t1
Since 1929, stocks have had 24 negative calendar years, while bonds delivered a positive return 92% of those years.

Bonds delivered when stocks didn't

Performance data quoted represents past performance and is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

Portfolio heavy weighted in fixed income

How can you diversify fixed income risk?

With flexible bond strategies. A high concentration in interest rate or credit risk leaves your portfolio vulnerable to drawdowns when rates or credit conditions change. Flexible strategies adapt to changes in the market with tactical diversification.

Flexible bond strategies can help protect portfolios as markets change2

Flexible bond strategies can help protect portfolios as markets change

Performance data quoted represents past performance and is no guarantee of future results. Investment returns and principal values may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown. All returns assume reinvestment of dividend and capital gain distributions. For most recent standardized performance of the BlackRock Strategic Income Opportunities Fund click here.

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