Earn Up to 10% on Your Money

Yields are beginning to lift off. We found great deals for every level of risk.

- ANDREW TANZER

It is hard to believe that just a year ago, the U.S. economy was virtually in free fall, a victim of the pitiless coronavirus pandemic. Unemployment rates soared, yields on Treasuries plunged to record lows, and fear gripped financial markets. Today the environment is nearly the reverse: Economic growth is gaining steam, helped along by trillions of dollars of federal government stimulus; inflation is picking up; yields on Treasuries are rising; and investors are embracing risk again. // Although the economic story is brightening, the same cannot be said for investors seeking income and yield. The S&P 500 index of large-company stocks continues to establish record highs but yields only 1.4%, one of the lowest rates in market history. Interest rates on investment-grade bonds such as Treasuries and high-grade corporate debt are still remarkably low by historical standards and vulnerable to rising rates (bond prices and interest rates move in opposite directions). For example, iShares 20+ Year Treasury Bond, an exchange-traded fund that holds a basket of long-term Treasuries, has lost 12.5% for the year to date, which is six times its yield. Matt Pallai, head of Harbor Funds’ multi-asset solutions, says, “What we see now across the world is that income is one of the most scarce resources.”