Advisors looking at ways to lock in retirement income for clients are dusting off an old strategy -- bond laddering -- which had fallen from favor in the past few years but is looking increasingly attractive, now that the global economy is slowing and the bull market shows signs of age.
“Bond ladders are appropriate for clients that have a goal to mitigate interest rate risk,” says Kevin Lynar, a senior advisor at Rowe Lynar & Associates in Fort Lauderdale, Fla., which is part of Wells Fargo Advisors Financial Network. “In periods of modest interest rate increases or decreases [as we have experienced in the past several years], a bond ladder can be effective and may potentially outperform other strategies such as only short-term bond investing.”
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