Take Comfort in a Volatility Buffer

  • |
  • 00 mins 57 secs
In today’s environment, investors not only take on less risk to generate the income they need, higher yields also provide them with “shock absorbers” against any future rate hikes.
Learn more about navigating a higher yielding world 
Channel: Columbia Threadneedle Investments

Columbia Threadneedle Investments is a leading global asset manager that provides a broad range of investment strategies for individual and institutional clients. To learn more, visit www.columbiathreadneedle.com/us

Navigating a higher yielding world: Fixed income 

Gene Tannuzzo, CFA
Global Head of Fixed Income

The good news for 2023 is that fixed income has its last name back, meaning yields are higher, there is really income to be earned.

Investors need to remember that higher yields provide a sense of cushion against future volatility. At the beginning of 2022, yields were exceptionally low. There was no cushion. Yields are significantly higher now. And even if we see a Federal Reserve that is continuing to raise interest rates to fight inflation, the starting cushion is significant and can buffer a lot of potential volatility and smooth that ride for investors such that future returns can be much more attractive.


There are risks associated with fixed-income investments, including credit risk, interest rate risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer term securities.

The views expressed are as of December 2022, may change as market or other conditions change and may differ from views expressed by other Columbia Management Investment Advisers, LLC (CMIA) associates or affiliates. Actual investments or investment decisions made by CMIA and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be appropriate for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that any forecasts are accurate.

Securities products offered through Columbia Management Investment Distributors, Inc., member FINRA. Advisory services provided by Columbia Management Investment Advisers, LLC.

Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies. 

© 2023 Columbia Management Investment Advisers, LLC. All rights reserved.                                                      5447690

Show More