Traditional investment philosophy would lead one to believe that older investors are the most likely to own bonds as part of their investment portfolio. This makes sense because older investors are generally more conservative and want to protect their investments. But recent research conducted by Spectrem Group with investors with $100,000 to $25 million of net worth flips this logic on its head.
As you can see below, bond ownership is relatively similar regardless of age with a few exceptions. For example, multiple types of bond offerings (inverse bonds, individual corporate bonds, fixed income ETFs) are more likely to be owned by younger investors than older investors.
While bonds are owned by all age groups, it’s important to note that older investors have much larger balances in most types of bonds than younger investors.
As the Federal Reserve begins to tinker with interest rates throughout 2022, the demand for bonds may change in the next few months. While bonds have not been popular during the recent bull market, if the stock markets begin to enter bear market territory, bonds may become more popular. Financial advisors need to be ready to discuss bonds and their place in the portfolio of their investors.