FCA - Short-Term Vs. Long-Term Bonds: Analysis And Comparison

2024-04-01 22:02:06 ET

Summary

• Different bonds have different characteristics, including credit quality, maturities, duration, and others.
• Maturities are of particular importance when interest rates are in flux, as they currently are.
• An analysis and comparison of short-term and long-term bonds, looking at dividends, returns, potential capital gains, risk, and volatility, follows.

Bonds and fixed-income securities have become much more popular investments these past few years, as Federal Reserve hikes have led to much higher yields. Bonds and bond funds vary, with different characteristics including maturities and credit risk. In this article, I'll be comparing short-term and long-term bonds, looking at how their dividends, returns, and risk, compare.

Yield Comparison

Short-term bonds currently yield more than long-term bonds, holding credit quality constant, and with a few exceptions. As an example, short-term treasuries tend to yield less than long-term treasuries, with a couple exceptions in the curve....

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