Investors may want to consider bonds to help weather the market’s recent volatility.
BondBloxx co-founder and CEO Joanna Gallegos recommends prioritizing income and high-yield bonds.
“As you start to diversify and manage more risk, it’s important to start thinking about fixed income,” she told us CNBC’s ETF Edge” on Monday.
Gallegos also suggested adjustments to the yield curve.
“Fixed income today is very different than it was two years ago,” she said. “We’re at the tail end of a significant rate hike. So, interest rates are high, which makes the portfolio look a lot different today than when we started with rates almost zero.”
PIMCO’s Jerome Schneider, who runs one of the world’s largest actively managed bond exchange-traded funds, also advises investors to look at bonds.
“They are generally underweight on fixed income going into these market conditions,” said the firm’s head of short-term portfolio management. “What we see here is that through an actively managed fixed income diversified portfolio, there is a lot to be gained. Better risk-adjusted returns than in years.”
Schneider predicted the Fed would begin cutting interest rates this year and warned money market fund yields could fall “very soon.”
“We think the front of the yield curve is where it’s most attractive right now,” Schneider said. “There’s a lot to look at in a diversified portfolio in the 2-year, 3-year, (and) 5-year space. Chance.”
