
US Treasurys have been a great ride for the past half a decade, but for those starving for yield, the end of the line may be here.
“Investors have become frustrated because the returns to savers from conservative investments like Treasurys have become negligible,” said Larry Luxenberg, a financial planner in New City, N.Y. “In some cases, returns are even negative.”
That’s right.
Some investors “have scared themselves into demanding higher negative returns,” said Aaron Skloff, CEO of Skloff Financial Group in Berkeley Heights, N.J.
He notes, for example, that some banks charge fees “simply to maintain an account, more than wiping out the miniscule yields they offer.”
Skloff also notes that adjusting for current and expected inflation rates , developed-market government bonds (like U.S. Treasurys) provide negative yields to maturity.
Even yields on 10-year Treasury Inflation-Protected Securities, TIPS, have been negative since the fourth quarter of 2011, implying that “investors are paying higher prices for the relative safety of these investments,” Neuberger Berman said in a recent report on Treasurys.
Money market funds are hardly the answer. They’re yielding just a couple of basis points, according to Bankrate.com. Returns on CDs are only a shade better.
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