Everyone Hates Bonds. Why Two Bond Managers Say You're Hating the Wrong Ones

<p>John Kerschner and Michael Contopoulos of Janus Henderson join Matt Zeigler to explain why persistent inflation and higher interest rates call for a different approach to bond investing. They explore short-duration bonds, AAA CLOs, mortgage-backed securities and how investors can rethink the fixed income allocation in a 60/40 portfolio.</p><p>The conversation covers why traditional bond benchmarks may deliver too much interest rate risk for their yield, how ETFs expand access to securitized credit, and why the AI buildout could add to inflation rather than solve it.</p><p>High-Conviction Views: The time for short-duration bonds<br /><a href="https://www.janushenderson.com/en-us/advisor/article/high-conviction-views-the-time-for-short-duration-bonds/" rel="ugc noopener noreferrer" target="_blank">https://www.janushenderson.com/en-us/advisor/article/high-conviction-views-the-time-for-short-duration-bonds/</a></p><p>Janus Henderson Investors<br /><a href="https://www.janushenderson.com/en-us/advisor/" rel="ugc noopener noreferrer" target="_blank">https://www.janushenderson.com/en-us/advisor/</a></p><p>Topics covered:</p><ul><li><p>Why deglobalization, fiscal spending and labor constraints could keep inflation and interest rates elevated</p></li><li><p>How the Bloomberg US Aggregate Bond Index concentrates interest rate risk and leaves out large parts of the bond market</p></li><li><p>How AAA CLOs work, why their coupons float, and why they are different from cash</p></li><li><p>Why tight corporate credit spreads may offer insufficient compensation for the risks investors take</p></li><li><p>The three jobs of fixed income: safety, income and insurance</p></li><li><p>How duration determines whether rising rates can wipe out a bond portfolio's income</p></li><li><p>Why bond ETF discounts can reflect price discovery when underlying bonds are not trading</p></li><li><p>How Treasury borrowing and AI hyperscaler debt issuance affect bond supply and relative value</p></li><li><p>Why AI capital spending, electricity demand, labor shortages and wealth effects can create inflation</p></li><li><p>How to rebuild the bond allocation around securitized credit, agency mortgages and the risks in your equity portfolio</p></li></ul><p>Timestamps:</p><p>00:00 Rethinking bonds after years of disappointing returns<br />04:28 Why the forces behind the bond bull market have changed<br />10:09 The hidden interest rate risk in the Aggregate Bond Index<br />14:53 AAA CLO ETFs: Floating income, structure and drawdown risk<br />20:44 Treasury fiscal risk and tight corporate credit spreads<br />26:16 Moving beyond set-and-forget bond funds<br />30:45 How duration can overwhelm your bond yield<br />36:27 Bond ETF liquidity and price discovery during stress<br />41:11 Treasury borrowing, AI debt and securitized bond supply<br />46:00 How hyperscaler borrowing can create credit market dislocations<br />50:29 Four reasons AI could increase inflation<br />55:56 Rebuilding the 40% bond allocation in a 60/40 portfolio<br />01:02:00 Municipal bonds, recession protection and balancing equity risk</p><p>Learn more about the Excess Returns podcast network:<br /><a href="https://excessreturns.co/" rel="ugc noopener noreferrer" target="_blank">https://excessreturns.co</a></p><p>No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.</p><p></p>