James McInstosh

The Hunt for Yield: Risk-Free Return or Return-Free Risk?

James Mackintosh, Scott Evans, Robert Kricheff, AJ Murphy, Anne Walsh, Andrew Whittaker, James McInstosh, Bob Krychev

A panel of institutional investors and asset managers characterizes the fixed-income market as being in a late-stage bull phase with historically tight spreads, prompting a strategic shift toward defensive positioning despite a consensus that the environment remains distinct from the speculative excesses of 2007-2008. While participants are reducing exposure to overvalued assets like U.S. agency mortgage-backed securities and wary of liquidity risks from passive investing and covenant-lite debt, they continue seeking yield premiums in sector-specific opportunities such as second-lien loans and selective high-yield issuers. This cautious approach reflects concerns that corporate leverage remains elevated and that potential macroeconomic catalysts, including fiscal policy changes and geopolitical shifts, could abruptly alter the trajectory of an otherwise extended credit cycle.