Blinded by Equity Performance. Don’t Overlook
the Opportunities in Bonds


Over the course of the past month, we have conducted meetings with clients to get a better sense of how they are positioned and what concerns they have about the future.  One theme has been consistent, the strength of equity market rally and the risks that may be lurking around the corner which could lead to a significant sell-off.

But what has surprised us the most has been how few people understand the relative attractiveness of bonds versus stocks right now.  As we look over the past 50 years (see chart below), there has never been a point where bonds have been this “cheap” to the stock market.

Price Ratio of S&P 500 to US Aggregate Bond Index (as of 4/18/24)


Even on a stand-alone basis, we believe this could be a good time to invest in bonds. The Federal Reserve Bank has made clear their intent to lower policy rates.  A delay in that decision has created a short-term opportunity to purchase bonds at attractive levels of yield.  Of course, risks remain that inflation pressure persist and market yields can rise from where they are today.  But we believe that over a long-term horizon, buying bonds at these levels represent a good risk/return trade-off.


3 Strategy Considerations: 

    1. We believe now may be a good time to close the gap: Now is the time to take actions to close the gap on your strategic allocations between stocks and bonds.  If you are overweight stocks and underweight bonds, you should consider working with your advisor to opportunistically close that position.     
    2. Position on the curve: We believe intermediate to long duration bonds will outperform shorter maturities as the market adjusts for what is likely to be an extended period of time when the Fed will be lowering rates.  We also like the added protection of longer maturities in the event of a correction in the stock market.  
    3. Own high quality bonds: If we assume that risks may be growing around a potential pull-back in stocks, we would recommend investors consider focusing on investing in the high quality segments of the bond market.  US treasuries, highly rated corporate and municipal bonds offer the most protection from a repricing of “risky” assets like equities. 

Do you want to dig deeper into this topic?  We have the experience and capabilities at KinneyMunro to build a diverse bond portfolio. 









This material is provided for informational and educational purposes only. It does not consider any individual financial circumstances. As such, the information contained herein is not intended and should not be construed as individualized advice or recommendation of any kind. Investors should contact their advisor regarding their personal circumstances and needs. The S&P 500 is a market-capitalization-weighted index that tracks the stock performance of about 500 of some of the largest U.S. public companies. The U.S. Aggregate Bond Index is designed to measure the performance of publicly issued U.S. dollar denominated investment-grade debt. The indexes are unmanaged and cannot be directly investment into. Investing involves risk and the potential to lose principal. Past performance does not guarantee future results. Investing in any bond is subject to risks, including, but not limited to, market, interest rate, issuer, credit, inflation, and liquidity risk. Changes in interest rates impact the value of most bonds and bond strategies. Bond investments may be worth more or less than the original cost if sold before maturity. 



Investment Advisory Services are offered through Mariner Platform Solutions (MPS), a SEC Registered Investment Adviser.

KinneyMunro Wealth Advisors and MPS are not affiliated entities.