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Use these market charts to support your conversations with clients about asset-allocation opportunities.

Your Clients Don’t Have to Sit in Cash

August 27, 2026

Two potential paths off the sidelines: shorter maturities for interest-rate-sensitive clients, and high-yield corporate bonds for those who can accept credit risk.

Bar chart comparing yield to worst of various investment classes

Key takeaways:

  • With the Iran war, sticky inflation, new tariff developments, and interest rate policy uncertainty center stage, investors should be prepared for volatility if they are focused on potentially higher-yielding opportunities.
  • Yet investors don’t necessarily need to remain in cash. Short- and intermediate-term bonds may provide attractive income with less interest-rate risk than longer-term bonds, while high-yield corporate bonds might make sense for clients comfortable with greater credit risk at a shorter duration.
  • And for clients with longer-term fixed income needs, investment-grade corporate bonds may offer opportunities to capture attractive yields, depending on risk tolerance and time horizon.
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Schwab 1-5 Year Corporate Bond ETF

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Schwab 5-10 Year Corporate Bond ETF

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Schwab High Yield Bond ETF

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Duration—For an individual bond or bond portfolio, a calculation used to estimate how a change in the interest rate will affect the bond price. The calculation usually assumes a 100-basis point change in the interest rate. For example, if a bond has a duration of 8, it's expected to go up or down 8% in price if the yield to maturity for the bond moves 1%.

Yield to worst—A measure of the lowest possible yield that can be received on a bond that fully operates within the terms of its contract without defaulting. It is a type of yield that is referenced when a bond has provisions that would allow the issuer to close it out before its scheduled maturity.

Sources: Schwab Center for Financial Research®; Bloomberg Index Services Limited. Data as of 08/14/26. Indexes represented are Bloomberg U.S. Treasury Index, “U.S. Treasuries“; Bloomberg U.S. Mortgage-Backed Securities Index, “Mortgage-backed securities“; Bloomberg U.S. Municipal Bond Index, "Municipal bonds“; Bloomberg Taxable Municipal Bond Index, “Taxable municipal bonds”; Bloomberg U.S. Corporate Bond Index "Investment-grade corporate bonds"; Bloomberg U.S. Corporate High-Yield Bond Index, "High-yield corporate bonds." Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For additional information about the indices and terms shown, please visit www.schwabassetmanagement.com/resources/glossary.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

​Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.

Tax-exempt bonds are not necessarily a suitable investment for all persons. Information related to a security's tax-exempt status (federal and in-state) is obtained from third parties, and Charles Schwab Investment Management, Inc., dba Schwab Asset Management, does not guarantee its accuracy. Tax-exempt income may be subject to the Alternative Minimum Tax (AMT). Capital appreciation from bond funds and discounted bonds may be subject to state or local taxes. Capital gains are not exempt from federal income tax.

​Mortgage-backed securities (MBS) may be more sensitive to interest rate changes than other fixed income investments. They are subject to extension risk, where borrowers extend the duration of their mortgages as interest rates rise, and prepayment risk, where borrowers pay off their mortgages earlier as interest rates fall. These risks may reduce returns.

​High-yield securities and unrated securities of similar credit quality (junk bonds) are subject to greater levels of credit and liquidity risks and may be more volatile than higher-rated securities. High-yield securities are considered predominately speculative with respect to the issuer’s continuing ability to make principal and interest payments.

Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg’s licensors approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

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