Why Advisors Are Doubling Down on Munis, High-Quality Bonds Right Now

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Sign up for The Daily Upside for smart and actionable market news, built for investors.It’s evident from the market jitters since the start of war with Iran that there’s no real incentive to reach for yield right now in fixed income.As the second quarter nears, financial advisors still have plenty of chances to build higher-quality portfolios using fixed-income investments, as starting yields in many sectors provide opportunities to curb volatility without sacrificing returns. And advisors should expect that volatility to continue. Even before the Iran war, both stock and bond markets were in flux; tech dips prompted by worries that artificial intelligence would undermine sectors such as software is just one example. With a new Federal Reserve chairman expected this spring and mid-term elections near the end of 2026, stability is likely to prove elusive, said Sam Miller, executive vice president of investment strategy at Signature Estate and Investment Advisors.So far the US economic outlook remains firm, supported by an expected surge in capital spending under the One Big Beautiful Bill Act, and continued consumer buying, said Matt Wrzesniewsky, head of fixed income client portfolio management at Vanguard. But, the recent surge in energy prices from attacks by the US and Israel on Iran remains a wild card for the economy. Joseph Brusuelas, chief economist at RSM, said if oil prices hit $125 a barrel, it could have a broad, negative impact on growth, inflation, unemployment and the continuation of the business cycle.“At that level, it would extract a drag of between 80 and 100 basis points on gross domestic product and an increase of 160 basis points in inflation from 2.4% to 4% in the consumer price index,” he wrote in a post.Still, there are opportunities outside the US as diverging global monetary policy gives advisors chances to diversify fixed income holdings. In BlackRock’s recent Fixed Income Outlook, the asset manager urged investors to consider a broad range of options when building portfolios because starting yields are “unusually attractive” in the US as well as in Europe and Japan. Steve Laipply, global co-head of iShares fixed income exchange-traded funds at BlackRock, said fixed-income flows so far this year are ahead of the rolling 12-month basis across sectors, most notably in US Treasurys. It’s the same throughout  the industry, as global fixed-income ETF flows in February were about $65 billion, far ahead of the 12-month rolling average of about $56 billion. “Investors recognize that the opportunities in fixed income are still incredibly strong,” Laipply said.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,699.38 +67.19 (+1.01%)Dow 3046,946.41 +387.94 (+0.83%)Nasdaq22,374.18 +268.82 (+1.22%)Russell 20002,503.29 +23.24 (+0.94%)VIX23.51 -3.68 (-13.53%)Gold5,014.20 -47.50 (-0.94%)Trending tickersADBE Adobe Inc. 251.86 +2.54 (+1.02%)BTC-USD Bitcoin USD 74,219.02 +2,459.95 (+3.43%)XYZ Block, Inc. 59.85 +0.06 (+0.10%)ULTA Ulta Beauty, Inc. 516.74 -18.98 (-3.54%)RBRK Rubrik, Inc. 51.67 -1.76 (-3.29%)PortfolioSign in to access your portfolioSign inTop gainersNSA National Storage Affiliates Trust 40.23 +9.29 (+30.03%)NBIS Nebius Group N.V. 129.85 +16.90 (+14.96%)BMNR Bitmine Immersion Technologies, Inc. 23.39 +2.85 (+13.88%)BCRX BioCryst Pharmaceuticals, Inc. 9.30 +1.08 (+13.14%)NSA-PA National Storage Affiliates Trust 22.72 +2.41 (+11.87%)Top losersTXG 10x Genomics, Inc. 16.69 -2.10 (-11.18%)VNET VNET Group, Inc. 9.53 -0.98 (-9.32%)PAYP PayPay Corporation 19.35 -1.79 (-8.47%)FSLY Fastly, Inc. 22.79 -1.79 (-7.28%)KLAR Klarna Group plc 14.91 -1.00 (-6.29%)Most activeNVDA NVIDIA Corporation 183.22 +2.97 (+1.65%)INTC Intel Corporation 45.76 -0.01 (-0.02%)ONDS Ondas Inc. 10.53 +0.37 (+3.64%)PLUG Plug Power Inc. 2.2400 +0.0900 (+4.19%)AAL American Airlines Group Inc. 10.49 +0.19 (+1.84%)Top economic eventsEarnings eventsMy earnings eventsEarnings events