The Long Term Investor
Rethinking Bonds: How to Strengthen Your Retirement Portfolio in Today’s Market With David Braun (EP.180)
Nov 27, 2024
David Braun, a seasoned U.S. Generalist Fixed Income Portfolio Manager at PIMCO, shares his 30 years of investment wisdom. He discusses the vital role of core bonds in retirement planning, highlighting how rising yields present new opportunities. The conversation shifts to why active management is crucial over passive strategies in today's market. Braun also addresses the implications of growing U.S. national debt on bond yields and risk profiles, encouraging a reevaluation of fixed income strategies for a changing economic landscape.
35:16
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Quick takeaways
- Core bonds provide essential capital preservation and income generation, even as their traditional roles face challenges in a high-yield environment.
- Active management significantly outperforms passive strategies in the bond market due to complexities and inefficiencies, especially amid rising U.S. national debt.
Deep dives
Understanding the Bond Market
The bond market operates differently than the stock market, characterized by its over-the-counter trading and inherent inefficiencies. Retail investors often purchase bonds at higher prices than institutional investors due to these discrepancies, receiving lower yields without being aware of the hidden costs. The information asymmetry presents challenges for individual investors who may lack access to comprehensive data that active bond managers utilize to identify opportunities. Therefore, owning a bond fund managed by experts can provide better diversification and potentially higher returns compared to managing a portfolio of individual bonds.
