The conclusions are similar there is no reliable method of forecasting future bond prices, and therefore future interest rates. The bond market is efficient. Investors can increase their risk-adjusted returns with an alternative approach developed by Professor Eugene Fama of the University of Chicago. This variable maturity strategy shifts the maturities of the portfolio as yield curve changes create the possibility for lower risk, higher expected return outcomes. In recognizing the bond market as being highly efficient, the variable maturity approach does not anticipate changes in the yield curve, rather it seeks to maximize the risk-adjusted returns present in the current curve.
Investors can further expand their opportunity set by also considering global bonds.
If currency exposure is fully hedged, globally managed fixed income portfolios can provide higher expected returns and lower standard deviations. This projected performance data is based on past performance. Past performance is not predictive of future performance. The investment return and principal value will fluctuate so that an investor s shares in a portfolio, when redeemed, may be worth more or less than their original cost. This description does not constitute a prospectus.