Goldman Sachs Asset Management said it’s not too late to start thinking about moving away from short-term cash instruments and toward longer-term bonds. Investors have been enjoying solid cash yields, even as those payouts are down from recent highs. The Crane 100 Money Fund Index, based on the largest taxable money funds, currently has a seven-day annualized return of 4.18%. However, bonds can provide better income today, said Lindsay Rosner, head of multi-sector investments at Goldman Sachs Asset Management. About 99% of investment-grade bonds now yield more than cash, she said, compared with just 24% a year ago. For example, the Goldman Sachs Access US Aggregate Bond ETF, which tracks the investment-grade bond market, has a 30-day SEC yield of 4.50%. Bond yields are inversely related to prices. GCOR 1Y mountain Goldman Sachs Access U.S. Aggregate Bond ETF “(I’m) not saying you missed the opportunity,” she said during a webinar outlining the firm’s 2025 fixed income strategy. . In fact, the term premium is back, Rosner said. The term premium essentially means that investors are compensated more for holding long-term bonds. “Any money that’s in cash or money market funds can start to move out of the curve and be compensated by higher yields and wider spreads,” she said. “That’s actually a good thing.” Moving out of the curve not only locks in income but also diversifies your fixed-income portfolio, she said. She added that there are more opportunities for assets such as structured products and other high-yield issuers, for example. “When you get out of the curve, there are a lot of things you can invest in,” Rosner said. “The key to really repeatable and stable returns is diversification.” Although many credit spreads are in the tightest percentiles, she sees plenty of opportunity. The spread measures the difference in yields between Treasury bonds and other fixed-income assets of the same maturity. However, investors do need to do their homework, Rosner said. As such, active management is crucial right now, especially as passive funds tilt heavily toward government securities, she said. “With spreads tight, there’s a lot to deal with and make sure… you do your credit work – and figure out which credits are going to pay you back and not default and live in a high… interest rate environment, and you What environments do you want to stay away from,” she explains. For example, Rosner likes high-yield bonds rated BB and B, but with very specific names. She said there were even places to buy investment-grade credit, despite very tight spreads. “We think financials are really interesting. For example, we were underweight auto stocks on concerns about tariffs,” Rosner said. As of Dec. 31, top corporate issuers in actively managed Goldman Sachs bond funds included Bank of America, T-Mobile, Boeing, Morgan Stanley and UBS. Loan-backed securities. She said the company is looking for interesting opportunities in the primary market for these assets. “So there are places and opportunities to choose from in a lot of areas because of relative value,” Rosner said.
Goldman Sachs says it’s not too late to exit cash for gains. This is what it likes | Real Time Headlines
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