By Mark R. Anderson, CFA

With much of the worry surrounding trade off the table from last year, the market could be challenged to come up with an excuse for a large sell-off. We do not plan to go significantly underweight corporate bonds given our economic outlook, but we recognize that valuations and a desire to err on the side of conservatism will allow us to trim some positions. Our portfolio managers will continue to be overweight structured bonds (ABS, MBS and CMBS) and we believe municipal bonds have a better risk/return profile than high quality corporate bonds right now. High quality, index-eligible taxable munis are trading about 20 basis points cheap to similarly-rated corporate bonds right now.

Read the full Investment Review here: Fixed Income Investment Outlook