Underweight Japan? Goldman Sachs Leaders Talk Fixed Income Decisions

• Global volatility caused by the U.S.-Israel-Iran war will continue to impact fixed income
• AI, too, looms over markets, though potentially less disruptive
• Active ETFs have advantages over passive that can meet the moment

Hosted by VettaFi Head of Research Todd Rosenbluth, the webinar panel included GSAM Global Head of Client Portfolio Management for Multi Sector Fixed Income Alexa Gordon and Head of ETF Investment Strategy Marissa Ansell. The pair discussed how headline news from the Middle East as well as existing market trends are impacting the firm’s fixed income outlook and how active fixed income ETFs can help.

For Gordon, speaking first, the two main storylines impacting markets so far in 2026 have been AI and, of course, the recent war in the Middle East. The war’s significant impact on bond market volatility has also led to significant repricing in bank policy expectations worldwide. 

“Why was this conflict such a big deal?…There’s really one word and the word has three letters, and that’s oil,” Gordon said. She emphasized the marked slowdown in oil shipping out of the Strait of Hormuz. “This has been a huge price shock to the markets that’s led to surging oil and natural gas prices…more than a 60% increase since pre-war.”

“Assuming about six weeks of disruption is kind of what our best thinkers at Goldman are thinking,” she added. “We should expect some of those prices to come down from the $110 down to about $80 by the end of the year, but it’s clearly higher than where we came into the conflict…Why is it going to be higher? I think that the fact that there’s been significant damage to some of the infrastructure in the Middle East will take a long time to fix.”

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Those factors will lead, in her view, to both higher inflation numbers and a drag to growth. That has fed the repricing, she noted, with institutions like the Bank of England and European Central Bank (ECB) pricing in hikes this year and the Fed in a “wait and see” position. As a result, front end bond yields have moved up everywhere, a 50 basis point (bps) increase over March and a 93 bps increase in the U.K.

Gordon also shared some views on next steps regarding volatility from the Middle East and the continued impact of AI on tech, devastating firms like software-as-a-service (SaaS) companies. She explained that despite high rate volatility, spreads are still tight due to huge demand. Corporate bonds, she said “continue to be supported by really strong fundamentals,” with the category seen as “an attractive entry point for a lot of investors.”

“On the rate side, we’re really kind of looking to take advantage of central banks that are differing in their actions going forward,” she said. “And so that helps us express the views of our platform, including an underweight to Japanese rates where we think the central bank will continue to hike…And then overweights in places like the U.K. where we feel that the market has really dramatically repriced too much given some of the landscape and labor market weakness.”

See more: Marissa Ansell on Active ETFs, Goldman Sachs Funds & More

Ansell leaned into the ETF side of the picture for investors, having recently spoken to VettaFi about active ETFs. She noted the continued ascent of active ETFs, representing 11% of overall industry assets to end 2025 but pulling in 32% of flows and a staggering 86% of new launches. She emphasized to webinar viewers the merits of active in fixed income, pointing to the sheer number of available debt securities in which ETFs can invest.

“When we look at the fixed income market as an overall asset class just due to its size, its complexity, its structural inefficiencies, the market I think really lends itself to the benefits of active management,” she said, comparing the 4,600 equity securities in the U.S. equity market to the 1.2 million unique bonds available across categories.

What’s more, she noted, active ETFs have some fundamental advantages compared to passive offerings in the fixed income space. Big indexes like the Bloomberg Aggregate Bond Index, she said, exclude “almost half” of the overall market. 

“It’s very dominated by treasuries, as I mentioned, also investment grade credit and agency MBS mortgage-backed securities, but it actually completely excludes certain sectors like high yield corporates or non-agency mortgage backed securities,” she said. “And then it has really, really low representation in other sectors, including asset-backed securities and commercial mortgage-backed securities.

“As active managers oftentimes, again, it’s not that we want to buy everything in these sectors, but oftentimes they are good opportunities for an additional spread pickup,” she added. 

Active ETFs, then, deserve strong consideration from investors looking at fixed income. She pointed to the wrapper’s easy tradability, liquidity strength, tax efficiency, and other structural advantages as well. GSAM, Gordon explained, offers some notable fixed income ETFs to consider. 

For example, it offers funds like GUMI and GSST as options that could appeal right now. (GUMI C+), the Goldman Sachs Ultra Short Municipal Income ETF and (GSST ), the Goldman Sachs Ultra Short Bond ETF, both provide active offerings in their respective areas. Both charge 16 bps. GUMI targets tax exempt, high-income muni bonds, while GSST looks to offer greater yield from ultra-short bonds.

Taken together, active ETFs can provide powerful tools to adapt to a shifting outlook this year. As volatility rises, active, especially in fixed income, could be poised for a breakout.

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