Bank of America Just Declared a ‘Generational Entry Point’ in U.S. Bonds. Why Investors Should Be Backing Up the Truck on Treasuries Here.

Long-dated U.S. Treasuries have officially reached their worst 10-year rolling performance in a century. That's according to Bank of America Securities Chief Investment Strategist Michael Hartnett.

A 10-year rolling annualized return for Treasuries with maturities of 15 years or longer, which I track using ETFs such as the iShares 20+ Year Treasury Bond ETF (TLT) and PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ) have plunged to negative territory.

A "lost decade" for bonds could be a winning decade for bond portfolios.

If you do not vividly remember the lost decade for stocks (both of them, in fact), don't worry about it. Just know that the cyclical recovery in stocks we've enjoyed since started off a lost decade.

That huge drawdown in bonds is a stark contrast to the SPDR S&P 500 ETF's (SPY) annualized returns of 15% over the same period. And the Invesco DB Commodity Index Tracking Fund (DBC) gained 11% annualized. Yet, according to BofA's historical analysis, this extreme divergence is precisely why long-term fixed income might just be the next big thing.

I am particularly attuned to this development, not only because of my written coverage here, and what bigger voices like BofA are now pointing out, but because this week I literally launched Hedged Bond, an all-ETF model signal portfolio I built for my own family, and for subscribers who want to "copy off of Rob's paper" so to speak. I built it to help my subscribers build a bond ladder like I so often recommend but without having to buy bonds individually.

If you are looking ahead to retirement, and you're looking back at the madness that has been the four-year, AI-led stock market surge, it is hard not to at least consider that bonds might have a role going forward.

Building the core bond "ladder" with ETFs was actually the easy part, thanks to an innovative product line from iShares known as iBonds ETFs. Simply put, each ETF is dedicated to a type of bond and a maturity year. For instance, the iShares iBonds Dec 2026 Term Treasury ETF (IBTG) launched back in early 2020. At the time, five-year Treasuries yielded all of 1.1%.

But IBTG did what it was supposed to do. It held only bonds maturing in 2026. As the chart shows, that made those yields very uncompetitive as rates spiked to more than 4% over the next few years. Now, as a 2026 maturity bond would, IBTG is nearing its destination, having paid out a modest monthly dividend, and delivering an uninspiring, albeit expected, total return of 7.4% over its lifespan.