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December 22nd, 2015 | Financial Advisor IQ

Gerstein Fisher bond research featured in FA-IQ article

A Financial Advisor IQ article titled “Advisors Shy from Junk and High-Grade Corps” discusses recent performance of government and corporate bonds. The article states that investors should still allocate most of their long-term fixed-income assets to government bonds, even though the spreads between corporate bonds and government bonds has grown wider recently. New research by Gerstein Fisher cited in the article estimates that domestic intermediate-term investment-grade corporates over the past 29 years only provided about 1% more in average annual returns compared to similarly termed Treasuries, while Treasuries generated 25% less risk (as measured by standard deviation). While the S&P 500 index returned about four percentage points more annually on average than intermediate investment-grade corporates, CIO Gregg S. Fisher suggests that the place to take risk in a diversified portfolio is not bonds. As he explains, “If clients want to take on more riskier credits, our response would be to not bother — it’d be a much better tradeoff to increase their equity allocations.”

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