JPMorgan’s Foil to the Bonds-Are-Back Crowd Is Sticking to Cash

William Eigen isn’t about to apologize for his bond fund’s performance this year.

Yes, his $8.7 billion JPMorgan Strategic Income Opportunities Fund is trailing about 60% of its peers after trouncing nearly every one of them last year. But to him, that misses the point. His risk-averse clients appreciate, he says, the stress-free and steady nature of the 2.2% return he’s generated so far in 2023 by keeping the bulk of the portfolio in cash.

“It’s been a very smooth 2%, very easy, very nice, no volatility.” In other words, the exact opposite of the wild swings that have produced a slightly better average return for his peer group — 2.3%, according to data compiled by Bloomberg.

Eigen also sounds as convinced as ever that the economic diagnosis that underpins his strategy — that inflation will remain stubbornly high because the labor market is still too hot — is spot on.

“People are getting this wrong,” he said in an interview. The pandemic stimulus “has unleashed this inflation beast that is not going to go away anytime soon.” And so the Federal Reserve will have to keep interest rates high for a while, he says, making the annual rate he’s getting in a JPMorgan money-market fund — a bit above 5% — a better investment than five- or 10-year notes yielding less than 4%.

Cash Is King | T-bill yields have rarely been this much higher than 10-year rates