Michael Gray has devoted his career to following the capital markets and managing fixed income assets. He founded Gray Capital Management LLC and before that was Head of Taxable Fixed Income at Fidelity Investments. Michael has an MBA in Finance from Wharton and a BA in Economics from Union College.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, ...

Core Viewpoint - The article discusses the potential adjustments investors and advisors may consider for their portfolios in 2026, particularly regarding fixed income assets and the implications of interest rate changes by the Federal Reserve [1][2]. Group 1: Interest Rate Expectations - Expectations for a December interest rate cut by the Federal Reserve have diminished, but there is speculation that Fed Chair Jerome Powell may seek new employment in 2026, potentially leading to more accommodative monetary policy [2]. - A significant reduction in interest rates could reduce the attractiveness of short duration bonds [2]. Group 2: Investment Opportunities in Short Duration Bonds - The Neuberger Berman Short Duration Income ETF (NBSD) has shown a year-to-date return of 5.48% and has a weighted average duration of 1.88 years, indicating low sensitivity to Federal Reserve actions [3]. - The NBSD ETF has a 30-day SEC yield of 4.90%, which is notable given its low duration and minimal credit risk, while still benefiting from declining rates [6]. Group 3: Advantages of Short-Term Bonds - Short-term bonds are favored for their ability to generate current income with relatively low risk, making them suitable for many investors' portfolios [5]. - Although longer duration bonds typically provide more income due to higher rate risk, short-term bonds can still play a critical role in providing current income and reducing overall portfolio risk [8]. Group 4: Market Performance Insights - Short-term bonds tend to perform best during periods of declining interest rates and low inflation, although they do not benefit as much from downward trends in interest rates compared to longer-duration bonds [7]. - Over the past decade, short-term bond categories had lower returns but fared better than longer-duration categories during the bond market downturn in 2022 [7].

Core Insights - Michael Gray has extensive experience in capital markets and fixed income asset management, having founded Gray Capital Management LLC and previously served as Head of Taxable Fixed Income at Fidelity Investments [1] Group 1 - Michael Gray holds an MBA in Finance from Wharton and a BA in Economics from Union College [1]

Core Insights - The US Congress is one of three co-equal branches of government, alongside the Executive and Judicial branches [1] Group 1 - Michael Gray has extensive experience in capital markets and fixed income asset management, having founded Gray Capital Management LLC and previously served as Head of Taxable Fixed Income at Fidelity Investments [1] - Michael Gray holds an MBA in Finance from Wharton and a BA in Economics from Union College [1]