Portfolio Manager John Lloyd discusses today’s large moves in many fixed income markets due to heightened coronavirus concerns and outlines strategies that may improve capital preservation amid the volatility.
- The spreading COVID-19 coronavirus has pushed Treasury yields significantly lower, with the 10-year note testing historical lows. Meanwhile, investment-grade and high-yield corporate bond spread widening has been relatively muted.
- Investors should be aware of how their portfolios are positioned as more defensive sectors in the corporate bond market should fare better if the spread of the virus accelerates.
- Today’s swift and significant drop in bond yields is a reminder of the benefits of active management, including holding or adding to securities that can provide downside protection in volatile times.
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