Talking 20 year bond performance over five years is not a discussion I am interested in.
Well, when you buy it at a yield of 0.5% or whateter they were at the lowest it doesnt really matter what happens the next 10 years after the first five. You know you, over the lifetime of the bond will recieve 0.5% nominal return annually on the investment. That might turn out to be better than say t-bills during the period, but just what has happened the previous five years make that rather unlikely.
My main point is that when rates were at their lowest, to me it was weird that bonds were still a topic of discussion as if the actual extremely low effective yield one bought them at wasn't really relevant. I get why asset managers with a set mandate buy - they had to, and also why banks hold them (they serve several purposes for a bank) but why anyone who can do whatever they want with their money wanted to buy any such thing baffled me. The potential for monumental losses on something supposed to be safe/boring/stable/whatever should be rather obvious once one goes long in duration and the pickup over rolling short term pretty slim as well.
And as ChpBstrd points out, low-coupon bonds with long maturities have massive convexity as the weighted time to maturity is very long when coupons are close to zero and hence the potential for violent price moves if/when rates go up quickly.
I don't dislike bonds, I own a fair bit of the specimen myself and make my paycheck in the fixed income universe, but I didnt buy anything for myself when they didn't yield anything. Return-free risk was a pretty common phrase about bonds back then, especially in the eurozone where yields were deeply negative. 10y german government bonds yielded around -0.5% at the lowest.
These days yields of 4-5-6-7% (depending on currency, maturity and credit risk) feels high. That does not mean they cannot go significantly higher, and corprate bond credit spreads (yield pickup over treasuries) are also somewhere around historical lows. They can go even lower if/when investors diversify away from treasuries and into high-quality corporate bonds.
This is a slight digression from BNP, which has an weighted average maturity of around 8y and a duration of ca 6y. The latter number was closer to the former when yields were lower. But the very long-term bonds seve as the cleanest example of key bond metrics such as yield, coupon, convexity and duration. If shtf one will probably also learn the importance of credit spreads as they can blow out. This is normally the scenario when treasuries outperform their corporate cousins.
