Essentially Nothing. That’s How Much Bonds May Return Over Next Five Years

The golden age for buying and holding bonds may be coming to an end. And that could come as a shock to investors who are entering retirement. They may very well be counting on bonds to repeat their strong, recent returns while at the same time diversifying the rest of their portfolio, as they have during a three-decade bull market.

Horizon Investments’ calculations show just how bleak the next few years might be. The estimated annualized five-year return for the broadest bond market measure, the Bloomberg Barclays U.S. Aggregate Bond Index, is 0.0%, based on expectations for future interest rates and the current duration of the index. The main problem is that if interest rates rise, the current yield could be too paltry to make up for the drop in bond prices.

Rising rates are not the only problem. The other retirement dilemma is that today’s historically low interest rates could last for years, caught in the Federal Reserve’s vice-like grip. The central bank is promising to avoid negative interest rates (which would keep the bond bull market going), and it’s also pledging not to raise rates for years. Together, they point to a fixed income market that could be entering an ice age of little to no movement.

As a goals based asset manager, Horizon focuses on reducing longevity risk for retirees in the distribution phase. Our research leads us to believe alternative income ideas, including equities, are an important consideration as part of a holistic strategy to make sure retirees don’t outlive their money.


Further reading:
Bond Market Bears Growling as 10-Yr Yield Tops 1%
It’s Getting Harder to Fund Retirement Using Bonds
7.9 Trillion Reasons Not to Fight the Fed, ECB, BOJ or BOE
In Current Markets, Only Two Words Matter: Stimulus Spending
Top 2021 Themes: Horizon Investments’ New Year Special Report


This commentary is written by Horizon Investments’ asset management team. For additional commentary and media interviews, please reach out to Chief Investment Officer Scott Ladner at 704-919-3602 or


To download a copy of this commentary, click the button below.

Download The Big Number

To discuss how we can empower you please contact us at 866.371.2399 ext. 202 or

Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security. This report does not attempt to examine all the facts and circumstances that may be relevant to any company, industry or security mentioned herein. We are not soliciting any action based on this document. It is for the general information of clients of Horizon Investments, LLC (“Horizon”). This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security in question is suitable for their particular circumstances and, if necessary, seek professional advice. Investors may realize losses on any investments. Index information is intended to be indicative of broad market conditions. The performance of an unmanaged index is not indicative of the performance of any particular investment. It is not possible to invest directly in an index.
Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed herein are our opinions as of the date of this document. We do not intend to and will not endeavor to update the information discussed in this document. No part of this document may be (i) copied, photocopied, or duplicated in any form by any means or (ii) redistributed without Horizon’s prior written consent.
Other disclosure information is available at
Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC
©2021 Horizon Investments LLC
You are now leaving this website to go to

Connect product to planning with the Horizon technology suite. Goals-based strategies, cutting edge software.

Explore mutual funds managed by Horizon Investments.