Ideas
EM debt leads fixed income performance.
Emerging market debt has been the best-performing area of fixed income year to date and last year, which signals there are attractive opportunities outside the US; investors are looking abroad for returns while the US remains a core allocation.
Diversify from US into emerging markets.
US indices have a concentration problem and huge amounts of money track them; investors are diversifying away from the US, not selling US assets, and moving into emerging markets where equities and debt offer good risk-return after roughly a decade of underperformance.
Covered-call ETFs are gaining income flows.
Flows to option income ETFs that sell covered calls have outnumbered dividend ETF flows over the last three years; these funds are about 25% of dividend ETF assets, and investors like receiving option premium with some equity upside as a way to generate yield now that fixed income rates are no longer depressed.
Money-market cash should rotate into bond ETFs.
Money market funds hold about $8 trillion in assets after years of dominating flows; with rates dripping lower and two or three cuts possible this year, that cash should be deployed into fixed income products—active, across the duration curve, or in different credit segments—creating a massive opportunity for fixed income ETFs to take share.
Income is back in fixed income.
Income is back in fixed income since 2022 after almost two decades of zero rates; bonds are not just the safety part of a portfolio but also an opportunity and income source, so investors should use more fixed income.
Favor intermediate BBB corporate credit.
Within credit, investors should favor investment-grade credit but move out to triple-B for a yield advantage with basically the same default risk; they should also stay intermediate because rates are expected to fall, bringing price appreciation, and intermediate credit outperformed most fixed-income categories in the fourth quarter.
Diversified private credit ETF yields attractive income.
More companies are private than in the past, so investors need private credit to access the full opportunity set. High-quality private credit offers attractive yield without as much risk; PCMM yields close to 7% with duration under one month and average A credit quality, and its diversified exposure to over 7,000 loans and 27 managers mitigates the single-manager markdown risk seen in headlines.
Private capital stocks face markdown stress.
The main stress point is private capital stocks: public private-equity and private-credit names are having trouble, and headlines show private credit funds being marked down. Less-liquid vehicles are where further stress may appear, unlike more transparent ETFs.
Low-volatility equities can ride out volatility.
A new Fed chair and a midterm election year historically bring more equity volatility; low-volatility strategies have seen outflows over the last few years and may make a comeback, so investors should look at low-vol equities to ride out the storm in the equity sleeve.
Move out duration to capture yield.
The shorter end of the curve is dripping lower, but investors can move out on the duration scale and still get a good return without credit blowups; those too heavily in the short end should consider extending duration to capture yield while hedging a volatile policy year.
International fixed income offers diversification and yield.
The firm likes international exposure in fixed income this year to help investors diversify and capture attractive yields developing outside the US, while still looking at the full public and private credit opportunity set.
This CNBC video, published February 03, 2026,
features Joanna Gallegos, Todd Sohn
discussing EMB, EEM, Option income ETFs, Fixed income ETFs, TLT, Intermediate BBB corporate credit, PCMM, Public PE and private credit stocks, SPLV, BNDX.
11 trade ideas extracted by AI with direction and confidence scoring.
Speakers:
Joanna Gallegos,
Todd Sohn
· Tickers:
EMB,
EEM,
Option income ETFs,
Fixed income ETFs,
TLT,
Intermediate BBB corporate credit,
PCMM,
Public PE and private credit stocks,
SPLV,
BNDX
