How to integrate bond ETFs into your portfolio in times of uncertainty
Marketing Communication
Diversified1 portfolios could help mitigate risk exposure, typically by having allocations to corporate and government bonds as well as equities.
Bonds are also known as fixed income investments, because they pay a set rate of annual interest. In the past, they often gave lower returns than equities, but would also have been less volatile in particular over short to medium term horizons2.
Having said that, bonds have also performed well during some periods when equities have fallen2. This means that having a proportion of an investment portfolio allocated to fixed income may reduce its overall volatility3, and potentially deliver more consistent returns over the long term.
The performance of a global bonds in the first four months of 2025 underlines the potential resilience offered by fixed income. As global equities fell, bond returns rose2.
The performance of a global bonds in the first four months of 2025 underlines the potential resilience offered by fixed income
Source: Amundi Investment Institute, Bloomberg. Data as of 9 April 2025. Indices are with no fees and no taxation. Past performance is no guarantee of future results.
Building a portfolio with bond ETFs
Generally speaking, the higher the percentage of bonds versus equity in a portfolio, the lower its overall risk and potential returns2.
The most appropriate proportion of bonds in an investor’s portfolio will depend on their attitude to risk as well as their investment goals and time horizons.
Investment advisers often talk about a ‘60/40’ portfolio, which refers to a portfolio made up of 60% equity investments and 40% bonds. It is important to bear in mind that this precise mix might not be suitable for everyone, though it could provide a good starting point for investors looking to create a balanced portfolio.
The decline in global equities in the first quarter of 2025 -- attributable to Trump's announcement on tariffs and investors turning away from certain overvalued stocks at the beginning of the year4 -- highlight the need for a balanced portfolio. And besides 60/40, there are other ways to use bonds in a more defensive-minded portfolio.
A portfolio with a defensive profile (composed of 70% euro-denominated bonds and 30% European equities) showed remarkable resilience in the first part of the year, with losses of less than 1%5.
The two most common types of bonds by issuer are:
Government bonds issued by national governments.
Corporate bonds issued by companies.
Corporate bonds can be divided into two categories:
Investment grade corporate bonds which are issued by companies viewed as carrying a lower level of risk1.
High-yield corporate bonds are those that are seen to be riskier but that tend to have higher yields1 to reflect this increased risk.
Learn more about our fixed income strategies
1 Diversification does not guarantee a profit or protect against a loss.2 Past performance is not a reliable indicator of the future ones. 3 Volatility measures the amplitude of price variations in a financial asset over a given period. The greater the price variation - on both upside and downside - over a shorter timescale, the greater the volatility. The historical volatility of a financial asset can be calculated taking the annualised Standard Deviation of its return during a defined period. 4 Source: Amundi, Morningstar. Data as at end-March 2025.5 Source: Amundi Investment Institute analysis on Bloomberg data. 2025 performance is YTD as of 4 April 2025. Conservative Euro allocation is made up of 70% Bloomberg Euro Aggregate Bond index in Euro and 30% MSCI Europe TR in Euro (unhedged). Indices are with no fees and no taxation. Past performance is no guarantee of future results.
