Financial advisors were asked in 2018 what the 2019 bond market would look like. They said there would be an increase in both the long- and short term bond rates. They got it wrong, according to Incapital.

However, those who kept their clients invested in a basic bond strategy still made money for their clients, Incapital said in a review of the 2018 predictions that was released Monday.

More than two thirds of financial advisors who participated in the Incapital survey in 2018 said at that time that there would be an increase in both long- and short-term rates for 2019, which did not happen, said Incapital, a financial services firm that underwrites and distributes retail corporate notes and other securities to broker-dealers, institutions, asset managers, RIAs and banks.

“Despite misjudging the rate market, along with many other analysts and economists [who did the same], those advisors who stuck to basic bond investment strategies still helped their clients generate positive cash flow and reduce their risk profile in 2019.” Incapital said. The survey, “2018 Incapital Fixed Income Survey,” included 200 financial advisors across various channels.

“We saw a significant increase in trading volumes [in fixed income] throughout 2019 as investors sought to reduce their risk amid equity market volatility and in anticipation of a stock correction,” but they did not reap higher returns, John Tolar, Incapital managing director and dealer sales manager, said in a statement. The average daily trading volumes for 2019 increased by 9.7% over 2018, according to the Securities Industry and Financial Markets Association.

“Investors were undoubtedly challenged trying to navigate the uncertain rate environment throughout the year, exacerbated by several inversions on the yield curve,” said Tolar. “When rates started to change, some of that cash was redeployed into fixed income, and we also saw a lot of reinvestment of callable bonds.”

At the time of the survey, 34% of responding advisors said they expected their clients would be increasing their allocations to fixed income, versus only 29% seeing an increase in equity allocations.

“As the low-rate environment persists, the ever-prominent need for yield will continue to challenge fixed-income investors in the year ahead,” said Tolar. “However, there are opportunities in new issue corporate bonds, where investors can gain access to investment-grade, household names with the potential to generate attractive yields.”