Many of the eight leading U.S. bond managers overseeing nearly $700 billion favor selective, higher-quality holdings over big bets amid inflation, deficits and AI debt. The Bloomberg Aggregate Index is down 1% this year, its worst since 2022.
Most active managers interviewed are beating the Bloomberg Aggregate Index, but remain in negative territory year to date. The 10-year Treasury yield is around 5%; some managers say higher starting yields can generate income to offset price declines and offer buying opportunities.
Their approaches vary: Vanguard manager Arvind Narayan favors short-dated, high-quality bonds; PIMCO's Dan Ivascyn is buying asset-backed and residential mortgage-backed securities and sees opportunity in longer-dated Treasuries, while judging corporate bonds richly valued. Several other managers say higher yields have not made AI-linked corporate debt attractive.
