Touchstone Fund Beats Benchmark Despite Tighter Monetary Policy Expectations
The second quarter of 2026 was marked by persistent energy-driven inflation and a Federal Reserve leadership transition, which reinforced expectations for tighter monetary policy.
Elevated energy prices tied to the Iran conflict contributed to this trend.
Despite higher interest rates and a bear-flattening yield curve, fixed income markets remained resilient, according to data from the Touchstone U.S. Quality Bond Fund (TCPNX).
The fund outperformed its benchmark, the Bloomberg U.S. Aggregate Bond Index, for the quarter ended June 30, 2026.
The fund's overweight allocations to spread products, including utility bonds, SF MBS, and multi-family collateralized mortgage obligations (CMOs), contributed positively, benefiting from strong credit fundamentals and easing interest rate volatility.