Why Your Bond Portfolio May Be Riskier Than You Think

With the broader markets retracting much of their declines from early 2016, many investors find themselves letting out a sigh of relief and stepping back from the closer look they would have taken at their holdings had things continued heading south. The wise investor, however, will do the reverse. Today, when markets appear relatively stable, is the ideal time to inhale and get a good whiff of what’s really in your portfolio, particularly with respect to your fixed-income investments.

Back in the early days of coal mining, workers used canaries to test the air below ground for carbon-monoxide levels. Miners would carry these small birds with them for safety, because a dangerously high level of gasses would affect them first, giving the miner a chance to escape. If a financial canary flew into the depths of your current fixed-income holdings, would it come out unharmed? For more than a few investors, I suspect the answer is not what they would expect.

Read the rest of the article on The Wall Street Journal.