Jeffrey Sherman, deputy CIO at DoubleLine Capital, spoke about “the risk management component of the markets” at Exchange 2023, and how “there’s a good opportunity in fixed income today.”
See more: DoubleLine Launches DMBS and DCMB ETFs
Last year was characterized by high inflation and an aggressive Federal Reserve, which led to “volatility across the board.” So, Sherman said that investors still need a game plan.
“Some of the things that investors have leaned on for diversification just didn’t work last year,” Sherman told NYSE’s Judy Shaw. “I do think they’re coming back in vogue this year.”
Specifically, he noted that “the fixed income market can provide an offset to some of the risk-taking out there.”
“There still is diversification opportunity out there,” Sherman added.
Seeking Diversification Through Fixed Income
One fund that Sherman recommended for investors seeking diversification through fixed income is the DoubleLine Opportunistic Bond ETF (DBND ).
Launched last April, DBND is an actively managed fixed income ETF that invests across the credit spectrum. This includes up to 50% in below-investment-grade bonds. It also invests across the capital structure throughout the sectors of the global fixed income universe.
Sherman explained that a lot of the ETF market is “fragmented into really narrow nichey ideas.” So, DBND is a “one-stop shop for investors.”
In today’s environment, the DoubleLine executive said that “with a prudent level of risk management,” investors “can build portfolios today that yield in a high 5% range without taking egregious amounts of risk.” Considering the high yield market “didn’t even yield 5%” 18 months prior to the interview, that’s saying something.
So, with inflation coming down, Sherman said that investors “now have this opportunity where… bonds offer a significant positive real yield today.”
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