In our monthly report, we discuss our decision to sell into strength in credit asset classes and move to more defensive positioning among mortgage-backed securities.
Portfolio Allocations
Robert Vanden Assem, CFA
Head of Investment Grade Fixed Income and Chairman of Fixed Income Asset Allocation Team
Seeking a higher quality profile, we reduced our target allocations in investment grade credit and high yield by 5%, respectively, in favor of securitized products. Credit spreads continued to narrow due to a more dovish central bank narrative, a weaker US dollar, and a sharp recovery in oil and other commodities. But while record-setting inflows at high yield mutual funds and exchange-traded funds have created supportive technicals, divergent central bank policies likely will lead to volatility in coming months.
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