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Bonds of the Future? We'll pass.​


Today’s historically low interest rates may be just the beginning of the issues facing people nearing or in retirement who have been urged to rely on bonds to fund their golden years. 

This white paper examines the effect of today’s low yields on the outlook for bond returns, the potential reduction in income and the lack of portfolio diversification benefits, as well as the relative attractiveness of certain bond alternatives.



  • Passively investing in bonds for today’s retirees may increase longevity risk.
  • Financial market assumptions for bond returns are poor for the foreseeable future.
  • Future returns for popular target date funds are constrained by today’s low bond yields, in stark contrast to strong returns for those funds over the last 20 or 30 years during a bond bull market.
  • Bond-like equities have attractive income opportunities

All of the major use cases for passively investing in bonds is challenged by low yields.


Bonds of the Future? We’ll Pass

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. These opinions may not be reflected in all of our strategies. 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.

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Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC

©2021 Horizon Investments LLC


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