Fixed Income Asset Allocation Insights (March 2016)

Portfolio Allocations

Robert Vanden Assem
CFA, Managing Director, Head of Investment Grade Fixed Income and Chairman of Fixed Income Asset Allocation Team

We reduced our investment grade credit target allocation by 5% in favor of securitized products as we seek higher quality and lower duration. Mortgages have held up reasonably well this year with refinancing activity relatively benign despite sharply lower Treasury rates. Nonetheless, we continue to favor investment grade credit over emerging market debt and non-US dollar currencies. We remain neutral on high yield.

Credit spreads have rebounded from February’s wides as China’s central bank assuaged concerns of a large yuan devaluation. Fears about European bank stability have subsided, and US economic data are moderately encouraging.

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