Fixed Income Asset Allocation Insights (April 2016)

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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