How to shift your bond portfolio as the Fed pauses interest rate hikes

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The Federal Reserve on Wednesday announced a break from raising interest rates, while projecting two more hikes. Here's what it means for bond portfolios.

to protect portfolios from interest rate risk. But allocations may shift, depending on future Fed policy.

"I don't want to get too aggressive with increasing duration," said Newell. "Because clients with bonds typically are more conservative, and it's really about protecting principal."As policy shifts, advisors are also looking for ways to optimize allocations amid continued economic uncertainty.how poorly bonds performed

last year," such as corporate bonds trading at a discount, below "par," or face value, said Ashton Lawrence, a CFP and director at Mariner Wealth Advisors in Greenville, South Carolina. "We're always looking to find a sale or discount," Lawrence said, noting that high-quality discount bonds have built-in growth as long as the assets don't default. "You're capturing that appreciation while you're getting paid along the way," he said.

Of course, every investor has different needs, Lawrence said. "But there are definitely some areas of opportunity within the fixed income field."

 

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