Fund rebalancing supporting bond prices

|By:, SA News Editor

Private pension funds and insurance companies - their equity exposure rising along with stock market - have returned to the long end of the curve this year to rebalance their portfolios, says JPMorgan Private Bank CIO Richard Madigan, helping to support prices as Fed dials back QE.

Madigan didn't and doesn't expect a "great rotation" from fixed income to equities, instead arguing the boost in equity inflows has come and will come at the expense of too-high cash balances. Why own fixed income? Bonds continue in their role of buffering other investment risk in portfolios.

"In the middle of everything lies opportunity," said Einstein. We're mid-cycle in the global recovery, says Madigan, maybe frustrating those late to invest, but still offering plenty of opportunity.

ETFs: AGG, BOND, BND, BSV, BIV, BLV, SCHZ, LAG, SAGG, ILTB, DI, GVI, ISTB, GBF, LDUR, MINC, FWDB, AGND, GIY, AGZD