Allocation Update
Fixed Income Monthly
By Crit Thomas, CFA, CAIA, Erik M. Aarts, CIMA, Tim Paulin, CFA
High-Quality Bias: We remain tactically overweight investment-grade bonds, attracted by compelling yields and lower economic sensitivity. Despite returning more than 7% over the past year, investment-grade credit still yields at or above the 70th percentile looking at the past decade—leaving room for further solid returns. Longer-term, high-quality municipal bonds also look appealing. Having lagged taxable sectors this year, they offer relative safety, supported by state fiscal discipline and record “rainy day” reserves that help buffer against near-term downturns.
