JPMorgan Asset Management ( J.P . Morgan Asset Management ) is issuing a bullish outlook on a market segment that is under-equipped: high-quality fixed income.
Pria Mislra ( Priya Misra ), the portfolio manager of the company, believes that this is a "once-in-a-lifetime" opportunity for investors.
Misra stated this week on the CNBC program “ETF Edge” that: “You can actually take on credit risks in the highest-quality companies and still achieve a yield of 6.5%. Therefore, there’s no need to lower your credit qualifications.”
She stated that this strategy is particularly suitable for investors who are concerned about having an excessive exposure to artificial intelligence stocks.
Mislar said, “The AI exposure is very large. Fixed income can provide you with a more diversified range of return sources. It’s not just about AI trading or tech trading. You have U.S. Treasury bond trading, as well as credit assets that go beyond AI.”
Misra jointly manages JPMorgan Chase's core enhanced bonds ETF ( JPMorgan Core Plus Bond Fund ETF, code: JCPB ). According to the company's website as of August 31, the fund manages assets worth nearly $16 billion, with over three-quarters of its holdings being debts rated BBB or higher.
She said, "We have actually increased some positions in double-B and single-B bonds, as the high yield spreads have widened. We are optimistic about certain investment-grade bonds. Moreover, in the past few days, we have also started to increase our duration positions, as we believe this round of interest rate trends may be coming to an end."
According to FactSet data, as of the close on Friday, JPMorgan Chase's core enhanced bonds ETF have fallen by more than 5% this year.
Mislar also pointed out: 'You need to examine the macro environment for each individual bond and each sector, and at the same time, you must conduct a bottom-up analysis to ensure that companies are not over-leveraging.' She is concerned that higher interest rates could harm the housing market.
BondBloxx Co-founder Joanna Gallegos ( Joanna Gallegos ) also advises investors to take advantage of the yield levels in the debt market, which are “attractive in history.”
In the same interview, Gallegos stated: "You indeed should consider adding some corporate bonds to your portfolio. For investors, it is in their own best interest to start paying attention to the returns that fixed income offers again. It can offset the volatility in your portfolio."
One of the reasons she is bullish is that the base interest rate is high and remains stable.
Garcías added, "The fundamentals of these companies are very strong, and their economies are continuing to grow. We indeed believe that this aspect is being overshadowed by the narrative surrounding U.S. Treasury yields."
The BondBloxx she is part of is renowned for its fixed-income exchange-traded funds, covering sectors such as U.S. Treasury bonds, corporate bonds, private credit, and emerging markets.
One of its funds is BondBloxx Private Credit CLO ETF (code: PCMM). According to FactSet data, as of the close on Friday, this fund has declined by 0.6% this year.
