Most investors reinvest interest from bonds, Wright added, indicating that households do not invest in bonds for yield. “They do it for safety,” he said. “They expect inverse correlation.”
Litman Gregory is allocating into alternative credit strategies, like short-duration emerging markets debt, floating rate loans, short duration high yield, and structured securities.
“There’s a lot of refinancing in floating-rate bonds, which is a bit frustrating because yields have come down,” he said.
Chang and Chee both like option-income strategies and closed-end fund pricing arbitrage opportunities.
Wright likes municipal bond funds, even for IRA accounts. Munis are “currently undervalued relative to Treasurys and corporates, so it’s a gimme,” he said.