BlackRock Inc., Fidelity Investments and Charles Schwab Corp., which together manage more than $5 trillion, are all bullish on corporate debt.
The Federal Reserve’s pledge to keep interest rates at a record low through late 2014 means investors should take advantage of the extra yield, or spread, offered by asset-backed securities, commercial mortgage-backed debt and high-yield bonds in the U.S., according to BlackRock. It’s favoring securities due in five years and less, said Rick Rieder, chief investment officer for fundamental fixed-income portfolios for the company, which has $3.51 trillion in assets.
“One of the ways to take advantage of fixed income is to buy spread assets,” Rieder said yesterday in an interview from London. Yields on short- and medium-term Treasuries are “going to be very low for a long time.”
Corporate bonds (Dow Jones Corporate Bond Index chart above) are outperforming U.S. government securities this year as the world’s biggest economy shows signs of growth. Treasuries have returned 0.3 percent, versus 2.4 percent for company debt, according to Bank of America Merrill Lynch indexes.
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