“…But how should savvy investors interpret forecasted returns? Can they be reasonably trusted? Consider that a fixed-income investor might forecast a specific total return (nominal yield + price change) assuming a future market yield (price) for a given investment period and be quite close to achieving the forecasted total return if the guestimated future yield (price) proves valid. However, when this premise is dissected, a corollary emerges. There appears to be a proportional relationship that suggests the accuracy of this forecasting hinges on the prevalence of a bond’s explicit, constant and known properties…”

Continue Reading

By Chris Thompson, Executive Vice President, Capital Markets Group