Bank Loans, High-yield Bonds Come Out on Top
Bonds largely recovered in the first half of 2023 amid hopes that the Federal Reserve is nearing the end of a tightening campaign that has seen the fed funds rate reach 22-year highs. According to data from Morningstar Inc. for the 12-months ended June 30, the median return for its domestic fixed-income universe was 2.09%. Meanwhile, the Bloomberg U.S. Aggregate Bond index slipped 0.94% for the period. In the second quarter of 2023, the median return in Morningstar's domestic fixed-income universe was -0.09%, while the Bloomberg U.S. Aggregate Bond index fell 0.84%. Morningstar's list of top-performing managers for the year ended June 30 was dominated by bank loans, which accounted for six of the top 10. High-yield bonds accounted for three spots and a muni national long bonds strategy took the remaining spot.
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