Many of you have undoubtedly heard the phrases “bonds are back,” or “there is income in fixed income,” or “we’ve gone from TINA to TARA.”¹ No matter how you phrase it, the current situation for fixed income is better than it’s been in years, and the potential for enhanced fixed-income returns makes this moment in time a potentially good entry point for many fixed-income strategies. 

But what are your clients’ expectations? Are they looking for higher regular income payments? Higher overall returns? More importantly, are your clients comfortable with the lingo of fixed income, especially when it comes to understanding the different mindsets necessary for maximizing either income or total return?

¹ In financial circles, TINA is a popular acronym for “there is no alternative” to equities. TARA is an acronym for “there are reasonable alternatives.”

² Spreads are the difference in yields between two fixed-income securities with the same maturity, but originating from different investment sectors.

³ Bloomberg U.S. Aggregate Bond Index is composed of securities that cover the US investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.

⁴ A basis point is a unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indices, and the yield of a fixed-income security.

⁵ Net Asset Value (NAV) is the net value of an investment fund’s assets less its liabilities, divided by the number of shares outstanding. Most commonly used in the context of a mutual fund or an exchange-traded fund (ETF), NAV is the price at which the shares of the funds registered with the U.S. Securities and Exchange Commission (SEC) are traded.

Important Risks: Investing involves risk, including the possible loss of principal. • Fixed income security risks include credit, liquidity, call, duration, event and interest-rate risk. As interest rates rise, bond prices generally fall.

All information provided is for informational and educational purposes only and is not intended to provide investment, tax, accounting, or legal advice. As with all matters of an investment, tax, or legal nature, you should consult with a qualified tax or legal professional regarding your specific legal or tax situation, as applicable. The preceding is not intended to be a recommendation or advice. Tax laws and regulations are complex and subject to change.

The views expressed here are those of the author and should not be construed as investment advice. They are based on available information and are subject to change without notice. Portfolio positioning is at the discretion of the individual portfolio management teams; individual portfolio management teams, and different fund sub-advisers, may hold different views and may make different investment decisions for different clients or portfolios. This material and/or its contents are current as of the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Hartford Funds.