Commentary
The committee decided to shift overweight duration in October amid the surge in rates as the Fed restarted its inflation fight. The 105% relative duration overweight remains a promising call as yields retreat under 5.00%.
TIPS offer a strong hedge against persistent inflation, especially as energy costs remain elevated. In the Committee’s view, combining an overweight on duration with some inflation protection via TIPS remains a winning combination.
Convertibles (CWB) provide exposure to technology and electricity, two sectors that have benefited significantly from the AI infrastructure buildout. While this position has underperformed, we believe pessimism is dominant right now as investors raise concerns about valuations and funding for AI-related companies. Issuance relative to projected returns warrants close monitoring, but the committee sees constant negativity as a strong signal we are not at a tipping point yet.
The details below reflect index positioning relative to the baseline benchmark effective November 2, 2026.
Relative Positioning
90% relative underweight
5% convertibles & 5% in TIPS
Allocation
| Name | Market Value (%) |
|---|---|
| iShares MBS ETF | 25.37 |
| iShares 3-7 Year Treasury Bond ETF | 14.71 |
| Schwab Short-Term U.S. Treasury ETF | 11.25 |
| Vanguard Long-Term Corporate Bond ETF | 9.15 |
| Schwab Long-Term U.S. Treasury ETF | 8.35 |
| Vanguard Intermediate-Term Corporate Bond ETF | 7.43 |
| SPDR Bloomberg Convertible Securities ETF | 5.00 |
| iShares TIPS ETF | 5.00 |
| Vanguard Short-Term Corporate Bond ETF | 4.98 |
| iShares 7-10 Year Treasury Bond ETF | 4.24 |
| iShares Agency Bond ETF | 2.00 |
| iShares BBB Rated Corporate Bond ETF | 2.00 |
| iShares 20+ Year Treasury Bond ETF | 0.52 |