Unlocking Fixed Income Strategy in a Changing Yield Curve

The Wealth Enterprise Briefing

For the past few years, short-term bonds and money market instruments have offered investors attractive returns, typically without requiring substantial exposure to interest rate risk. However, as the yield curve normalizes, the short end of the curve may no longer represent the most strategic opportunity.

In the latest episode of The Wealth Enterprise Briefing, managing partner Michael Zeuner and senior investment manager Sam Sudame discuss the implications of a more normalized or steeper yield curve, focusing on its impact for fixed-income investors.

Key points discussed include:

• Yield curve transformation: The curve has moved from inverted to positively sloping, indicating a new dynamic for investors.
• The need to shift: With the Federal Reserve expected to continue reducing rates in the coming years, fixed-income investors need to consider adjusting their strategy.
• The “sweet spot”: The middle part of the yield curve, commonly known as the "belly," presents an opportunity for investors to achieve solid returns while limiting exposure to excessive interest rate risk.
• Avoid long durations: For the majority of individual investors, the risks linked to longer durations tend to outweigh the potential rewards.

Stay tuned for the next episode, where Michael and Sam will discuss the broader implications of a more normalized, steeper yield curve for the equity market.

As always, if you have any questions or need further insights into your investment strategy, please don’t hesitate to contact us.

Important Information:

This podcast contains our current opinions and commentary that are subject to change without notice. Our commentary is distributed for informational and educational purposes only and does not consider the specific investment objective, financial situation, or particular needs of any recipient. Information contained herein has been obtained from sources we believe to be reliable, but we do not guarantee its completeness or accuracy. The information contained herein does not constitute legal or tax advice to any person. Please consult with your legal or tax advisor regarding any implications of the information presented in this presentation.