Fixed Income: A Defensive and Patient Playbook

By John Lovito - April 10, 2018

The first quarter of 2018 reminded markets that volatility is a risk—one we haven’t seen for nearly a decade. When markets gain steadily for an extended period of time, it’s easy to lose sight of the fact that markets can also surprise to the downside. That’s why I consider it so important to have a team in place that’s seen multiple market cycles, has outperformed throughout those cycles and can pivot as markets demand.

Volatility drove two of the biggest pivots we made recently. We became more defensive with regard to our exposure to developed markets, and we increased exposure to emerging markets. In this quarter’s outlook, I provide insight into my thought process around liquidity, trades and rate hikes.

John Lovito
John Lovito
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      Generally, as interest rates rise, bond prices fall. The opposite is true when interest rates decline.

      International investing involves special risks, such as political instability and currency fluctuations.

      Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.