Buy in May and Enjoy the Stay?

Posted by Lawrence Gillum, CFA, Chief Fixed Income Strategist

Tuesday, May 2, 2023

In this week’s Weekly Market Commentary, we noted the seasonal stock market pattern in which stocks generally produce the best returns from November through April and the worst returns from May through October (although we note this pattern hasn’t been true recently). But most investors may not be as familiar with the seasonal patterns in fixed income markets. Because of the seasonal pattern in equity markets, changing investor sentiment has translated into a strong demand tailwind for fixed income markets and the summer months have generated, on average, some of the best monthly returns of the year.

As seen in the chart below, some months appear more or less favorable for core fixed income, as measured by the Bloomberg U.S. Aggregate Bond Index, with August generally being the best performing month. However, May through August has, historically, represented the best stretch of average returns for the index over the last 20 years. Moreover, that stretch has also seen the highest median returns (averages can be misleading when you’re dealing with smaller numbers) and, except June, have seen the fewest negative monthly returns.  All this suggests the preferred destination for the “sell in May” crowd may be the fixed income markets.

View enlarged chart

Now, we would certainly not advocate repositioning portfolios due to these popular patterns because, again, average returns can be misleading, especially during a year that feels anything but average. So, whether the seasonal patterns in the equity or fixed income markets persist this year or not, we think owning core bonds in a diversified portfolio makes sense. The fact that fixed income markets have performed best over the summer months, when equity market volatility has tended to increase, is no coincidence. Core bonds have historically been the best diversifier to equity market risk and despite that lack of protection last year, we think the back up in yields now allows bonds to regain that role in portfolios.


This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. For more information on the risks associated with the strategies and product types discussed please visit  

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

For a list of descriptions of the indexes and economic terms referenced in this publication, please visit our website at

Securities and advisory services offered through LPL Financial, a registered investment advisor and broker-dealer. Member FINRA/SIPC.

Insurance products are offered through LPL or its licensed affiliates.  To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.

  • Not Insured by FDIC/NCUA or Any Other Government Agency
  • Not Bank/Credit Union Guaranteed
  • Not Bank/Credit Union Deposits or Obligations
  • May Lose Value
View All Posts