Standpoint logo

Content Library

Bridgewater: Grappling with the Reality of Zero Bond Yields

This three-part paper by Bridgewater discusses the implications of near zero bond yields and how that may impact the 60/40 portfolio. In typical Bridgewater fashion, using data from markets around the world and decades if not centuries of research, Bridgewater demonstrates the magnitude of the difficult situation investors are facing.

Key Takeways

  • Approximately 80% of all bonds are yielding below 1%.

  • For the first time in modern history, both the short term interest rate and long term interest rate are near 0%. Even in the 1930s and in 2008, when short term rates were 0%, bonds still had a 2%-4% yield.

  • Bridgewater believes we are only left with Monetary Policy 3 to recover from any future economic woes. The most likely outcome from MP3 is inflation.

  • A 60/40 portfolio has historically struggled during periods of inflation.

  • Watch the video.

The net of it is that zero bond yields reduce the return of the traditional 60/40 portfolio while raising its downside risk relative to its upside potential.

- Bob Prince and Greg Jensen

Contact Standpoint

info@standpointfunds.com602.688.2918
Schedule a callFAQs

Standpoint Updates

Sign up for monthly updates

Scroll back to top

Important Disclosures

Standpoint Asset Management, LLC (Standpoint) is an investment advisor registered with the US Securities and Exchange Commission (SEC). For more information regarding the firm, please see its Form ADV on file with the SEC. Registration with the SEC does not imply a particular level of skill or training.

Investing in securities involves risk of loss that investors should be prepared to bear. Past performance is not indicative of future results. Diversification does not guarantee a profit or protect against a loss.

The views expressed herein represent the opinions of Standpoint and are not intended to predict or depict performance of any particular investment. All data provided by Standpoint including any reference to specific sectors is provided for informational purposes and should not be construed as investment advice. It does not constitute an offer, solicitation, or recommendation to purchase any security. These views presented are subject to change.

Standpoint does not endorse and is not responsible or liable for any content, advertising, products, services, or information on or available from third-party websites or materials. Standpoint may use content on this website that has been supplied by companies that are not affiliated with Standpoint (third-party data). Any third-party data contained on Standpoint’s website has been obtained from sources believed to be reliable, but the accuracy or completeness of the information cannot be guaranteed.

Standpoint is committed to make this website accessible to all audiences, including people with visual, hearing, mobility, and other disabilities. Reasonable efforts will be made to accommodate all users who utilize standard compliant web browsers, as well as enabling software or assistive technology.

If you are having any problems accessing the information found on this website, please contact us for assistance. Please note the nature of your accessibility problem, the format in which you prefer to receive the material, the web page address of the requested material, and the best way to contact you.

Standpoint Asset Management, LLC (Standpoint) does not endorse and is not responsible or liable for any content, advertising, products, services, or information on or available from third-party websites or materials. Standpoint may use content on this website that has been supplied by companies that are not affiliated with Standpoint (third-party data). Any third-party data contained on Standpoint’s website has been obtained from sources believed to be reliable, but the accuracy or completeness of the information cannot be guaranteed.

Please contact us via email at info@standpointfunds.com or by calling (602) 688-2918.