Name: Fixed income will remain essential in portfolios this year, predicts BondBloxx's Joanna Gallegos
Uploaded: 2026-02-03T22:49:55+00:00
Duration: 739 s

Speakers

Joanna Gallegos — Co-Founder, BondBloxx

Todd Sohn — Chief ETF Strategist, Strategas Securities

Summary

CNBC’s ETF Edge panel discusses fixed income allocation with BondBloxx co-founder Joanna Gallegos and Strategas Securities’ Todd Sohn. They see resilient credit fundamentals, attractive yields, and a likely move out of money market funds into fixed income as rates fall. Emerging markets, intermediate and BBB credit, private credit, and international fixed income are highlighted, while Todd Sohn also favors low-volatility equities and option income ETFs to navigate expected volatility.

Joanna Gallegos says income has returned to fixed income and investors should use more of it.
She favors investment-grade and BBB credit, intermediate credit, high-quality private credit, and international fixed income.
She notes emerging market fixed income has led performance year-to-date and last year.
Todd Sohn sees investors diversifying away from US concentration into emerging market equity and debt.
He expects money market cash to move into fixed income ETFs as rates are cut.
He also favors option income ETFs, low-volatility equities, and moving out the duration curve.
Both guests expect a volatile year around the new Fed chair and midterm elections, but see credit fundamentals as strong.

Ideas

Joanna Gallegos Co-Founder, BondBloxx 1:05

EM fixed income leads; look outside US.

Emerging market fixed income has been the best-performing area in fixed income year-to-date and last year, showing investors are looking outside the US for opportunities; she attributes this more to return-seeking and diversification than to a de-dollarization trade, while still acknowledging non-US asset demand.

Todd Sohn Chief ETF Strategist, Strategas Securities 3:09

Diversify from US into emerging markets.

US equity indices are concentrated in a small core of names, so investors are diversifying away from US assets—not necessarily selling the US—and returning to emerging markets, where both equity and debt offer good risk/return after roughly a decade of underperformance, supported by a clear rebound in flows abroad.

Todd Sohn Chief ETF Strategist, Strategas Securities 4:08

Option income ETFs attract yield-seeking flows.

Flows to option income ETFs that sell covered calls have outpaced dividend ETF flows over the past three years; investors like receiving option premium and some equity upside, and these strategies now offer yield that dividend ETFs used to provide in the QE era.

Todd Sohn Chief ETF Strategist, Strategas Securities 4:43

Rate cuts push cash into bonds.

Roughly $8 trillion in money market funds should be deployed into fixed income products as the Fed cuts rates; whether through active strategies, duration exposure, or different credit sectors, fixed income ETFs are a major opportunity to take share.

Joanna Gallegos Co-Founder, BondBloxx 6:20

Favor investment-grade and BBB credit.

Within fixed income she favors credit, especially investment-grade credit; investors should move out to triple-B credit because it offers a yield advantage with essentially the same default risk as higher-rated investment grade, which has rarely if ever defaulted.

Joanna Gallegos Co-Founder, BondBloxx 6:50

Intermediate credit benefits as rates fall.

She recommends intermediate-duration fixed income, specifically intermediate credit, because rates are expected to fall this year, shifting the return driver from just income toward price appreciation; intermediate also outperformed most fixed income categories in Q4.

Joanna Gallegos Co-Founder, BondBloxx 7:24

High-quality private credit offers attractive yield.

She likes high-quality private credit as a way for investors leaving money markets to reach for yield without taking as much risk; her firm's private credit product yields close to 7% with a duration of less than a month and an average A credit rating.

Todd Sohn Chief ETF Strategist, Strategas Securities 9:19

Low-vol equities can ride volatility.

He expects more equity volatility because of a new Fed chair and a midterm election year, and thinks low-volatility equity strategies may make a comeback after several years of outflows; he suggests looking at low vol to help ride out the storm.

Todd Sohn Chief ETF Strategist, Strategas Securities 9:47

Move out duration for better yield.

With the short end of the yield curve dripping lower, he suggests investors who are too concentrated in short-term fixed income consider moving out on the duration curve to capture still-attractive yields without taking on credit blow-up risk.

Joanna Gallegos Co-Founder, BondBloxx 11:22

Use more fixed income for income.

Income has returned to fixed income since 2022 and she argues investors should use more fixed income because bonds are no longer just the safety sleeve; with strong credit fundamentals, attractive yields, and tight spreads, fixed income can provide both income and opportunity.

Joanna Gallegos Co-Founder, BondBloxx 11:26

International fixed income offers diversification, yield.

She likes international fixed income exposure this year both to diversify portfolios and to capture attractive yields developing outside the US, complementing the broader fixed income opportunity set.

Fixed income will remain essential in portfolios this year, predicts BondBloxx's Joanna Gallegos

Summary

Ideas

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