How Did Bonds Get So Sexy?

They're beating equities, but picking the right kind isn't easy

When Jerry Thunelius, head of taxable fixed-income investments at Dreyfus Corp. speaks before brokers and their clients, he asks them this question: "Who owns stocks?" Everyone responds by raising a hand, he says. Thunelius then asks the crowd who owns bonds. "On average, two to three percent raise their hands," he says. If that's so, then many investors may be missing an investment whose returns could come closer to stocks over the next few years, but with less risk. With the economy slowing, bonds may be set to become market leaders.

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