What Should Investors Do With Bond Proxies As Rates Rise?

So-called bond proxies have become extremely popular with investors since the financial crisis. These proxies usually take the form of low volatility, defensive or high yielding equities, which provide a bond like returns but offer a higher yield.

Plunging bond yields have only increased the demand for these proxies during the past two years and as a result, many high yielding/defensive/low volatility stocks are now trading at nosebleed valuations.

Falling bond yields have also propelled equity markets higher as the lower risk-free rates are plugged into DCF calculations and the equity . . .


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