We held exposure to bank loans until recently, as they are higher up in the capital structure, resulting in a lower risk of default. However, we sold these positions as our outlook became more cautious and we neared a potential rate hike that we thought could pose trouble for the space.

In our traditional bond allocation, we have increased credit quality by reducing exposure to corporate bonds in favor of government bonds and mortgage-backed securities. This has increased our overall duration to avoid the shorter end of the yield curve as the Fed raises interest rates. We continue to keep our alternative fixed income allocation diversified with credit exposures to structured product, such as asset backed securities (ABS), commercial mortgage backed securities (CMBS) and residential mortgage backed securities (RMBS). We find these sectors attractive on a valuation basis and the fundamentals remain sound at this time.


Gary Stringer is the CIO, Kim Escue is a Senior Portfolio Manager, and Chad Keller is the COO and CCO at Stringer Asset Management, a participant in the ETF Strategist Channel.

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