Bonds Taking the Crown From Cash? Thornburg Explains

Core Insights - The article discusses the shift in investment strategy from cash to bonds, suggesting that bonds may offer better returns in the current rate-cutting environment [1][4] - Historical data indicates that during previous rate-cutting cycles, fixed income securities have outperformed cash, supporting the case for bonds [3][4] Bond Market Dynamics - In 2022, the Federal Reserve's aggressive rate hikes led to increased yields, prompting investors to flock to money market funds, which created opportunities for purchasing bonds at attractive prices [2] - As bonds approach maturity, their prices tend to rise, and with the Fed cutting rates, fixed income securities are expected to provide price appreciation alongside coupon payments, potentially exceeding declining money market yields [3][4] Active Management in ETFs - Active management is deemed essential in the current market due to the complexities of the bond market and the potential downward pressure on yields during a rate-cutting cycle [5][6] - Thornburg offers actively managed funds, such as the Thornburg Core Plus Bond ETF (TPLS) and the Thornburg Multi Sector Bond ETF (TMB), which aim to maximize income opportunities through high-quality bond portfolios and diverse fixed income assets [7][8]