Backlock’s Rick Leader has once again set his sights on a high-yield bond due to tariff-inducing volatility in the rearview mirror. But he is stuck with people who have 3-5 years of maturity. That’s because he expects more volatility at long-end rates. On Monday, the 10-year Treasury and 30-year Treasury yields spiked SPIKING after Moody’s downgraded the US credit rating to one AA1. It reached a high of about 5.03% in 2010, and at some point in 2010 it exceeded 4.5%. The leader, the chief investment officer of BlackRock, global bonds, recently reduced some of the high-yield exposures of his exchange trading fund, Ishares Flexible Income Active ETF (BINC), which he manages. The bonds were hit in early April after President Donald Trump announced his tariff policies and fled many investors to safer assets. Binc Ytd Mountain believes that flexible income is active in 2025, leading to a belief that the economy’s pullback will be short-lived and that the US economy is in good condition. He is currently adding higher earning assets to his portfolio. “The high yields in the US are still attractive, but they are of high quality,” he said. The BB valuation bond, the highest rating for non-investment grade tranches, trades in abundance as it acquires crossover buyers from investment grades, the leader said. He does not own CCC rated bonds. He said that if there is a slowdown in the economy, we can see defaults. The B-rated segment is a “sweet spot,” he pointed out. “You get the yield,” he added. Starting publicly this day two years ago and now with assets of over $9 billion, BINC now has nearly 40% of its portfolio in high-yield companies and loans. In the end, the majority will be in high-yield corporate bonds in the US. Funds traded on the exchange have a 30-day Securities and Exchange Commission yield of 5.57% and a net expense ratio of 0.4%. Leaders like agency mortgage support securities on the other side of high yields as Barbell’s approach. Assets are government-supported debt obligations, meaning there is little credit risk. Their cash flow is linked to interest and payments on the mortgage pool. “When rate volatility recovers, you can get a cheaper mortgage,” he said. “So we’ve added some mortgage papers.” The leader has recently added European sovereignty debts from Germany, as well as the surrounding sovereignty in France, Ireland, Spain, Italy, and more. He focuses on the five to ten-year section of the curve. “As a dollar investor, for FX (currency) swaps… the price in Europe is pretty interesting,” the leader said. After years of negative interest rates, “Now you can buy yields on a steep yield curve,” he added.
BlackRock’s Rick Leader says this is now the “sweet spot” of bonds
