Active Fixed Income

Is the AI infrastructure buildout one big trade in credit? So far, the market seems to think so. Spread dispersion – differences in borrowing costs among issuers – across the financing chain remains limited despite sharp differences in underlying risk. This contrasts with equities, where performance has become increasingly differentiated.

Last week, the refining margin on European gasoil, the benchmark that sets the price of diesel and heating oil across much of the world, closed at roughly $94 a barrel over Brent crude, according to Bloomberg data. That figure is normally somewhere between $12 and $18.

Attractive yields and resilient credit conditions are creating opportunities across fixed income, but uncertainty around inflation and interest rates makes flexibility, selectivity and disciplined risk management especially important.

In Part III, the focus will center on practical applications of this discipline. In particular, how advisors can integrate the methodology into modern asset allocation, and why it offers an evolutionary leap for passive investing that’s available through exchange-traded funds (ETFs).

Investors can’t get enough of ultrashort bonds. Driven by concerns over high equity valuations and rate volatility as the U.S. Federal Reserve mulls over the direction of interest rates, capital preservation strategies appear to be the elixir to help ease uncertainty. As such, ultrashort bonds have been seeing greater demand as traditional safe havens fall short on yield or carry unwanted duration risk.

One or a few high-performing stocks can provide a big boost to portfolio values. But they’re hard to come by and often struggle to maintain their momentum over time. Because these stocks increase portfolio concentration, investors must balance the risk of overexposure against the tax cost of diversifying. A thoughtful, tax-aware plan may help bring portfolios back in line.

While the name is new, Syzygy is not. Syzygy, formerly Research Affiliates, will extend our multi-decade sub-advisory relationships in asset allocation and long-only active equities and expand into other active diversification strategies in the coming quarters.

In this article, Russ Koesterich argues that momentum remains supported by strong earnings growth, making the factor attractive despite market risks.

Portfolio Managers Jonathan Coleman and Aaron Schaechterle outline why they believe momentum in small-cap stocks relative to large caps can continue, highlighting favorable earnings growth prospects, appealing relative valuations, and other structural tailwinds.

2026 began with 10-year Treasuries right around 4%, which many viewed as a comfortable place. The comfort came from some simple math—2 plus 2 equals 4. The long-term real yield on the 10-year Treasury was around 2% and the Fed’s inflation target is 2%.

With so much attention focused on what the Federal Reserve (Fed) might do at its policy meeting next week, it’s a good time to look back at history to get a sense of how stocks might respond should the Fed hike rates as the market (barely) expects.

Benchmark-Free has been a flagship strategy for half of GMO's history. As we approach our 50th anniversary in 2027, Ben Inker reflects on our first 25 years of Benchmark-Free investing.

For much of the past decade and a half, investors saw little reason to favor bonds over equities. Yields were low and returns were muted, especially in passive strategies. Equities seemed to offer a much clearer path to long-term capital appreciation. For many investors, bonds were, at best, ballast: a dull but generally stable component of a broader portfolio. Then the experience of 2022 had investors questioning even that view, as areas of high quality fixed income generated equity-like losses that eroded much of the prior decade’s real return.

LPL Research analyzes rising U.S. debt, Treasury yields, and fiscal trends, highlighting implications for markets and investors.

Chapter 3 of this series ended with a simple question. If the math so plainly says avoid big losses, respect valuations, and mind your timing, why does so much of the industry preach the opposite?

Bond markets around the world have trembled in the last week, as uncertainty continues to rise. A mix of geopolitical, trade, debt, and currency pressures have put immense pressure on yields. The Yen carry trade situation alone has soaked bond markets, but when combined with U.S. debt fears and Hormuz concerns, the picture has shifted.

The U.S. ETF market reached $16.4 trillion in AUM in August 2026, driven by record product launches and a defensive shift to Treasuries.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

I love ETF milestones and round numbers almost as much as I love watching football. There is something deeply satisfying about watching a fund hit a clean asset threshold. Crossing $500 million, $1 billion, or $2 billion in assets under management (AUM) is more than just a psychological victory. It signals real validation from financial advisors, provides greater liquidity, and lowers the risk of fund closure. Plus, as a fun bonus this week, our three featured funds all start with the letter B!

The “K-shaped” divide endures even as it evolves. Higher-income households keep benefiting from equity gains, home price appreciation, and solid earnings, while lower-income households face mounting pressure from elevated costs and tighter credit. But recent data suggest the story is becoming more nuanced.

Cerulli projects a $2 trillion surge in advisor-held alternatives over five years, as interval funds reshape how RIAs access private markets.

What if you could capture the potential gains of the S&P 500, but limit your losses if the market goes down? Or earn above-market income given the right stock market conditions? How about gaining some market exposure while protecting principal with FDIC insurance, up to applicable limits?

Stocks have enjoyed a powerful run off the spring lows and have largely shrugged off concerns around growth, inflation, higher interest rates, the effects of artificial intelligence (AI), geopolitics, and policy uncertainty. As the calendar turns to September, however, they are entering what has historically been, from a seasonality perspective, the most challenging month of the year for equities.

Anchoring is one of the most powerful—and underestimated—forces in financial decision‑making. Once an emotional label attaches itself to an idea, it becomes the lens through which people interpret everything that follows.

Geopolitical headlines can quickly move markets, but investors do not need to predict every headline to identify potential opportunity. The more useful question is what governments, businesses and consumers are doing in response to a changing strategic environment, and which companies may benefit.

US Treasury Secretary Scott Bessent made waves with his recent announcement that the Treasury would at least double the size of its buybacks of long-term debt in the coming months. He argues that long-term yields do not reflect fundamentals, suggesting that the Treasury's intervention is aimed to restore proper market functioning.

Highly concentrated US equity markets have been a consistent theme in recent years. Now, after the latest reconstitution of a major US equity benchmark, concentration is taking on a new form, with the Magnificent Seven’s grip loosening and semiconductor stocks gaining more influence. In essence, millions of passive investors received a new portfolio without making a single decision.

The high-yield market appears expensive at first glance. Spreads sit near the tight end of their historical range, which implies limited compensation for credit risk. However, spreads relative to their historical levels do not capture the full opportunity set of the asset class. Corporate fundamentals remain healthy, defaults are low, and the quality of today’s high-yield universe is higher than its long-standing reputation might suggest.

The backup in global yields since late February has reignited the debate over the potential knock-on effects for corporate borrowers, particularly through higher refinancing costs and weaker debt-servicing capacity.

Should the recent value rotation be viewed as a regime shift-driven change in market preference, or a simple reversal trade? We think there is a compelling case to be made for the former. In a regime of higher interest rates and stubbornly above-target inflation, the market is increasingly focused on capex intensity, free cash flow conversion, and the cost of capital.

The first two articles in this series were about behavior. This one is about arithmetic. There are three numbers that decide most of your investing life. Let’s do the math Wall Street skips, one number at a time.

A credit-allocation problem is complicating the Fed’s dual mandate, with current policy restrictive for many consumers and weaker borrowers, but less so for large corporates, higher-quality issuers, and borrowers with access to private credit.

As the month of August came to a close, the first index mutual fund got to celebrate a key milestone. The mutual fund in question is the Vanguard 500 Index Fund (VFINX), which originally launched on August 31, 1976.

Beneath relatively muted index-level volatility, single-stock implied volatility remains high. In today’s low-correlation environment, individual stocks are moving more independently, keeping single-name volatility high even as those moves offset at the index level.

San Antonio has been my adopted home for close to 40 years now. I’ve watched it grow through more than one boom cycle, but recent Redfin data suggests we could be looking at a bust.

Our real gross domestic product (GDP) forecast for 2026 is 2.5% (based on our Global Investment Management Survey) versus the Federal Reserve’s (Fed's) forecast of 2.2% and the Wall Street consensus of around 2%. The economy remains resilient and the consumer is strong.

Advisors did not slow down on exchange-traded funds in the second quarter. They added more of them, and pointed the money somewhere new, according to AdvizorPro’s Q2 2026 RIA ETF Trends report.

Treasury’s pivot toward long-bond buybacks gives duration buyers their first clear green light in months — and the November midterms may add a second leg.

We often hear that consumption accounts for roughly 70% of the US economy and that, as long as consumers keep spending, the economy will continue to grow. There is certainly some truth to that.

We think it’s time for investors to consider moving from a short-duration bias toward core (plus) bond portfolios. Valuations have become more attractive across fixed income, with all-in yields approaching compelling levels. We share our views on when and why.

For an asset often designated as a store of value, gold volatility has been especially apparent this year. After starting off the year with a high-paced record-setting run that lifted the metal to nearly $5,600 an ounce, including a 13% rally in January alone, momentum quickly faded as tensions with Iran ratcheted higher.

Investors are used to a swirling mass of scary headlines and geopolitical and monetary risk. Yen carry trade and yield concerns, however, may have some feeling of trepidation. Despite those risks, equities continue to appeal.

The most durable assumption in global investing is also the most outdated: that the United States is fundamentally a consumption story and China is fundamentally a capital-expenditure story.

Equity markets stumbled this week despite an economic backdrop that continues to show signs of broadening. While concerns about consumer strain are mounting, those worries have so far been offset by ongoing strength in business investment, particularly spending tied to artificial intelligence (AI).

As the credit cycle ages, defaults are likely to remain front and center. But for investors evaluating private credit alongside public markets, measuring defaults is not as straightforward as it may seem.

Macro strategists and global portfolio managers have their hands full on this final week of August. As we said recently, this is no time to mail it in before Labor Day in the U.S. And for equity traders and bottom-up analysts, NVIDIA (NVDA) writes the storyline in the sessions ahead. The world's most valuable company reports Q2 results after the bell on Wednesday.

This may come as something of a surprise since the financial press has not written or said much about how well this important—and opportunity-rich—subset of small-cap has performed over the last several months.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

Most of us try to be mindful not to put all our eggs in one basket. But the now-familiar concern that most portfolios are quite concentrated in a relatively small group of large US tech companies means that investors may still be doing just that.

GMO’s liquid alternatives are hedge fund strategies (e.g., equity long-short, global macro, event-driven) managed with an emphasis on risk control and liquidity. The GMO Alternative Allocation Strategy (“ALTA”) is a liquid alternative solution combining several underlying strategies; ALTA is available in a mutual fund with daily liquidity.

On August 19, the US Treasury announced that it will at least double the size of its long-term bond buybacks, from $2 billion to $4 billion per operation, between September 9 and the November Quarterly Refunding. The announcement followed a rise in the 30-year Treasury yield to roughly 5.3% and is drawing attention to how the Treasury may respond if pressure at the long end persists.

Leading asset managers T. Rowe Price announced the acquisition of $19 billion F/m Investments in a press release Thursday afternoon. The deal brings F/m’s suite of leading fixed income strategies and ETFs into T. Rowe Price’s fund stable, reinforcing those areas in the latter’s list.

For years, Russell index reconstitutions have been treated as a routine maintenance event. Thousands of stocks are ranked, memberships are adjusted, and markets move on

High-yield municipal bonds are one of the best performing asset classes this year but that doesn't mean we think all investors should consider adding them to their portfolio.

After recovering from the “tariff tantrum” that saw stocks of all sizes and styles bottoming out in early April of 2025, equities finished 2025 in admirable shape, carrying the positive momentum into 2026.

For many of the past several years, investor enthusiasm has been concentrated in a narrow group of AI-related and technology stocks. As liquidity conditions tighten and speculation begins to recede, broader market fundamentals are gaining importance.

Market leadership has broadened beyond mega-cap tech, but the next phase is likely to reward disciplined, diversified investors, write Chris Galipeau and Lukasz Kalwak of Franklin Templeton Institute.

Hedged equity as a liquid alternative uses an options-based equity strategy — specifically Swan Global Investments’ Defined Risk Strategy (DRS), in continuous operation since 1997 — as a permanent alternatives allocation that stays invested in the equity market while actively managing downside risk through LEAPS put options

Investor appetite for fixed income continues to expand, as evidenced by the latest weekly ETF inflows report from TD Securities. For the week ending August 14, 2026, U.S.-listed ETFs gathered $41.0 billion in total weekly net inflows, which included $13.2 billion into fixed income funds.

Anthropic’s preliminary second-quarter results reignited enthusiasm across the artificial intelligence sector, lifting semiconductor stocks 1% on Monday despite broader tech sector declines. Q2 revenue topped $11.5 billion — a 14x surge year-over-year and more than 2x last quarter’s figures.

FactSet finds core clients still favor cheap funds, while active ETF buyers pay a premium for performance, a trade-off advisors should watch.

With the US fiscal year 2027 (FY27) state budget season now largely complete, several important trends have emerged. Most states and local governments adopted their budgets without major delays or political impasses, an encouraging sign for two important credit considerations: governance and financial management.

Gold’s outlook has brightened considerably following its first-half correction. Spot prices have rebounded to flirt with $4,400 per ounce, supported by renewed central-bank buying, softer economic data, and diminished expectations for further Fed tightening.

There is no one-size-fits-all approach to choosing between individual bonds and bond funds. The choice depends on an investor’s goals, time horizon, risk tolerance, need for predictable income, and available assets.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

In 3Q26, global fixed-income markets continue to navigate a complex backdrop as resilient growth, elevated inflation, hawkish central-bank pricing and the AI infrastructure buildout intersect. Growth remains supported by the US consumer, fiscal spending in Europe and AI-related capital investment, while inflation is expected to moderate through 2026 and into 2027.