preparing portfolios
BLACKROCK INVESTMENT STRATEGIES

Investment strategies: 2024 bond bounce back

Bonds have been acting like themselves again after a decade of low yields. Sustained higher rates, a Fed pause and declining inflation may signal the time to re-up bond portfolios is finally here.

Consider getting back in with BlackRock fixed income strategies and investment ideas for 2024.
/blk-one-c-assets/documents/charts/preparing-portfolios-chart-new.csv bar-chart % column-simple false

Consider increasing bond allocations now that the worst may be over

The last few years were challenged for bonds, with 2022 marking the worst year, leaving many investors spooked and under-allocated today. Bullish bond market re-entry signals could mean now is the time to move back to bonds.

UST Bond 10Y index annual real returns (1928 – 2023)

Source: Bloomberg, as of 12/31/23. Represented by U.S. Treasury bond 10Y index annual real returns from 1929 through 2023. Past performance does not guarantee or indicate future results. Index performance is for illustrative purposes only. You cannot invest directly in the index.

Why re-invest in bonds today

Higher rates means ‘bonds can act like bonds’
Sustained higher rates

Higher rates mean ‘bonds can act like bonds’

Investors typically buy bonds for income and diversification – but they didn’t get either over the last few years. And higher rates mean your "yield cushion" may help limit portfolio downside in multiple market scenarios.

Press ‘play’ on bonds during the Fed pause
Fed pause

Press ‘play’ on bonds during the Fed pause

Cash is still dominating but an overweight could cost you. Not only have bonds historically outperformed cash when the Fed is at pause, but bonds have also generated overall higher returns after the first cut.

Declining inflation
Declining inflation

Declining inflation

Inflation has dropped meaningfully from it’s high of over 9% in 2021 to 3.2% today.4 This could allow the Fed to start cutting rates in 2024 – before that happens, consider locking in today’s higher rates for longer.

1 Source: Bloomberg; Cliffwater as of 12/29/23. Yield is represented by yield to worst, a measure of the lowest possible yield that can be received on a bond that fully operates within the terms of its contract without defaulting. U.S. 1-3Y Treasury refers to the Bloomberg U.S. Treasury 1-3 Yr Index. U.S. 3-7Y Treasury refers to the Bloomberg U.S. Treasury 3-7Yr Index. EM debt refers to the J.P. Morgan EMBI Global Core Index. U.S. Aggregate bond refers to the Bloomberg U.S. Aggregate Bond Index. Muni bond refers to the Bloomberg Municipal Bond Index. High yield refers to the Bloomberg U.S. High Yield Index. Private credit refers to the Cliffwater Direct Lending Index. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Not intended for comparison . The Cliffwater Direct Lending Index (CDLI) is included within this document to demonstrate how private markets perform differently from public markets during the same time period. Note that the indices contain several differences in the way that they are calculated, including the following, and therefore may not represent a fully accurate representation of the private/public credit market. The CDLI is an asset-weighted index based on quarterly SEC filings required of BDCs, whose primary asset holdings are U.S. middle market corporate loans. SEC filing and transparency requirements eliminate common biases of survivorship and self-selection. The index returns are generally published 75 days after calendar quarter-end. The public indices are rebalanced regularly, typically monthly. The public indices are market-value weighted. The CDLI is calculated using financial statements and other filings for the eligible BDCs (so the index’s figures are based on the BDCs’ underlying holdings), thus making it unlevered and gross of fees. BDCs whose filings are the source of the CDLI are regulated by the SEC under the Investment Company Act of 1940.

2 Source: Bloomberg, as of 12/31/23. Total return historical analysis calculates average performance of the Bloomberg U.S. Aggregate Bond Index (bonds) and the Bloomberg U.S. Treasury Bills: 1-3 Months TR Index (cash) in the 6 months leading up to the last Fed rate hike, between the last rate hike and first cut, and the 6 months after the first cut. The dates used for the last rate hike of a cycle are: 2/1/1995, 3/25/1997, 5/16/2000, 6/29/2006, 12/19/2018. Dates used for the first-rate cut are: 7/6/1995, 9/29/1998, 1/3/2001, 9/18/2007, 8/1/2019. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

3 Morningstar as of 12/31/23. Money market fund returns represented by the Morningstar Prime Money Market Fund Category from March 2001 to July 2002. Past performance does not guarantee or indicate future results. 

4 Source: Bureau of Economic Analysis (BEA), as of 10/31/2023.

Build your fixed income portfolio

Explore BlackRock fixed income solutions across the risk and yield spectrum for all types of investment portfolios and goals.

Objective Fund Name Ticker ETF or mutual fund
Income      

I want to tap into today's higher yields.

BlackRock Flexible Income ETF > BINC ETF 
BlackRock High Yield Bond Fund > BHYIX Mutual fund
BlackRock Credit Strategies Fund > CREDX Mutual fund
BlackRock Private Credit Fund > BDEBT  ETF 
Capital preservation      
I want to put cash to work. BlackRock Strategic Income Opp. Fund > BSIIX Mutual fund
BlackRock Short Duration Bond ETF > NEAR ETF 
iShares Core 1-5 Year USD Bond ETF > ISTB ETF 
iShares Treasury Floating Rate Bond ETF > TFLO ETF 
Equity diversification      

I want bonds that diversify my stocks.

BlackRock Total Return Fund > MAHQX Mutual fund
iShares Core U.S. Aggregate Bond ETF > AGG ETF 
iShares Core Total USD Bond Market ETF > IUSB ETF 
Outsourcing      

 I want to personalize and scale.

Fixed income SMAs > - ETF/Mutual fund
Model portfolios > - ETF/Mutual fund

The funds listed in the table above have been chosen by BlackRock and iShares product strategists to help represent potential investor portfolio objectives. The scope of the funds under consideration are iShares ETF and mutual fund offerings. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular and is subject to change.

The strategies listed in the table above have been chosen by BlackRock and iShares product and portfolio strategists to help represent potential investor portfolio objectives. The scope of the funds under consideration are iShares and BlackRock ETF and mutual fund offerings. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular and is subject to change.

Optimize your bond portfolio

The BlackRock Bond Pyramid is an interactive tool that showcases ways to blend active funds with bond ETFs to help meet portfolio goals or prepare for changing markets.
Pyramid Desktop

Resources for educating clients on investing for the long-term

BlackRock’s popular, end-client approved “conversation starters” help you get the conversation rolling.

Icon of convo bubbles
Conversation starters

When markets are volatile, clients’ emotions can run high. Each of them need to hear from you, but there aren’t enough hours in the day for individual conversations. This is where effective scaled communications can help you build and maintain client trust without zapping all your energy.

Icon of people
Counsel clients with behavioral finance

Logically, a client’s investment decisions should be driven by numbers. But, in reality, emotions can come into play. That’s why your clients need a coach to help them stay invested through market ups and downs.