How the world's biggest bond managers are investing in a tumultuous market
TLT•Managers overseeing nearly $700 billion say they are favoring selective, higher-quality investments and avoiding large macro bets. The Bloomberg Aggregate Index is down 1% this year, while 10-year Treasury yields are around 5%.
1. Conservative bond strategies
Eight of the largest U.S. bond fund managers, collectively managing nearly $700 billion, told Reuters they are taking a risk-averse approach in a turbulent market. Many favor shorter-term, higher-quality securities and careful security selection over large macro bets.
2. Yields and performance
The Bloomberg Aggregate Index is down 1% this year, its worst performance since 2022, though most active managers are outperforming it while still posting losses year to date. Managers said higher starting yields, including 10-year Treasury yields around 5%, provide income that can cushion price declines.
3. Different opportunities
Managers cited opportunities in asset-backed and mortgage-backed securities, as well as selected Treasuries and investment-grade credit. Several said corporate bonds and AI-related debt carry risks or look richly valued, while others are selectively evaluating those issues.
