J.P. Morgan Asset Management has issued a bullish outlook on high-quality fixed income, describing it as a once-in-a-generation investment opportunity. Priya Misra, a portfolio manager at the firm, highlighted that investors can achieve a 6.5% yield by taking credit risk in top-tier companies without compromising quality. This strategy appeals to those wary of over-exposure to artificial intelligence stocks, offering diversification across various sectors, including Treasuries and non-AI credit.
The JPMorgan Core Plus Bond Fund ETF (JCPB), co-managed by Misra, holds nearly $16 billion in assets under management, with the majority of its holdings in BBB-rated debt or higher. Misra noted an increase in exposure to double-B and single-B rated debt due to recent widening in high-yield spreads. Additionally, the fund has started to extend duration, anticipating the end of significant rate movements.
Despite a more than 5% decline in the JPMorgan Core Plus Bond Fund ETF this year, Misra emphasized the importance of careful selection, ensuring companies are not over-leveraged. She also expressed concerns about the potential impact of higher rates on the housing market. BondBloxx co-founder Joanna Gallegos echoed the bullish sentiment, advising investors to capitalize on historically attractive yields in debt markets.
Gallegos argued that the strong fundamentals of corporations and ongoing economic growth are often overshadowed by discussions around Treasury rates. Her firm, BondBloxx, offers fixed-income exchange-traded funds in various sectors, including the BondBloxx Private Credit CLO ETF (PCMM), which has seen a modest decline of 0.6% this year.