Bonds could provide better diversification than cash in down markets
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Investors who are overallocating to cash today may miss out on the benefits of bonds when markets decline.
- Over the past 15 years, when equities have declined, bonds have posted higher returns than cash equivalents.
- Investors who are overallocating to cash may be benefiting from relatively high yields and lower volatility today. However, a diversified portfolio that includes bonds could mitigate losses in down markets. This could provide investors with a smoother path to meeting their long-term investment goals.
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