Major U.S. bond fund managers are favoring selective, higher-quality investments and avoiding large macro bets as the Bloomberg Aggregate Index falls 1% this year. Treasury yields rose to 5.14% for 10-year bonds and above 5.46% for 30-year bonds.
Eight of the largest U.S. bond fund managers, collectively overseeing nearly $700 billion, told Reuters they are taking risk-averse approaches in a volatile market. Many favor shorter-term, higher-quality securities and careful security selection over large macro bets. The Bloomberg Aggregate Index is down 1% this year, though most active managers are outperforming it and remain in negative territory.
Rising Treasury yields, partly tied to inflation and deficit concerns, have increased income from bonds and may cushion price declines. On Thursday, the 10-year Treasury yield reached 5.14% after touching a 19-year high, while the 30-year yield topped 5.46%, its highest since 2004. Some managers said yields around 5% on 10-year Treasuries create buying opportunities.
PIMCO's Dan Ivascyn said he is buying asset-backed and residential mortgage-backed securities while viewing corporate bonds as richly valued; he also sees opportunity in longer-dated Treasuries. Other managers described favoring short-term investment-grade credit, mortgages and securitized assets, while several said AI-related corporate debt was not appealing at current terms.
