Vanguard Says Debt Investors Dreading Rates Rout Are Missing Out
- Sees high-quality investment-grade bonds as most attractive
- Firm is overweight MBS and likes longer-term municipal bonds
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Vanguard Group Inc. has a message for investors waiting for the all-clear before returning to fixed income following a brutal rout this summer: “Shake it off.”
The world’s second-largest asset manager, overseeing $7.8 trillion globally, expects interest rates to remain higher for longer and projects a shallow recession around mid-2024 and minimal room for high-grade spreads to tighten. Still, the Federal Reserve is nearing the end of its hiking cycle and investors are better off locking in higher rates for longer by loading up on corporate bonds, the firm’s fixed-income team led by Sara Devereux wrote in a note seen by Bloomberg.