Portfolio Update: Adding Back Some Duration

The Gardner Group is reducing our tactical overweight to short-duration, higher-yielding bonds and adding back some duration to the portfolios by increasing exposure to core investment-grade bonds. We will still be underweight duration relative to our strategic allocation, but directionally moving back towards benchmark weight.

Trades will take place for clients across the Growth With Income and Capital Preservation risk models. For those clients who are more aggressive, with higher exposure to equities, there are no changes to their models.

To fund the increase in duration/core investment grade bonds, we are reducing our tactical position in OSTIX/GIOIX.

Trade Details

When 10-year Treasury yields declined below 4% in Q3 2024, we meaningfully reduced duration in the portfolios by adding a sizeable tactical allocation to OSTIX/GIOIX. Since then, 10-year Treasury yields have moved higher to roughly 4.5%, and we want to use this as an opportunity to unwind half the position and add some duration back to the portfolios. To be clear, we are not saying long-term yields have peaked, hence only a partial unwinding of the short duration tactical position. If the 10-year Treasury moves closer to 5%, we’ll look to extend duration even further.

Thank you for the trust and confidence you have shared with The Gardner Group.