JPMorgan manager calls high-quality credit a rare fixed-income opportunity

JPMorgan fixed income opportunity is the case Priya Misra, a portfolio manager at J.P. Morgan Asset Management, laid out in comments to CNBC. Misra said she sees a rare opening for investors in high-quality fixed income, arguing that some highly rated companies can offer roughly a 6.5% yield without requiring investors to move down the credit-quality spectrum. It is her assessment, not a guarantee of future returns.

For investors whose portfolios have become concentrated in artificial-intelligence and technology stocks, Misra said fixed income can provide return sources beyond those themes. She pointed to a Treasury trade and credit outside AI as parts of that broader mix.

Why does JPMorgan see a fixed-income opportunity?

Misra’s argument rests on the income available in corporate credit while maintaining an emphasis on higher-quality issuers. She described the setup as a “once in a generation” opportunity in her CNBC interview, while also stressing that investors should examine debt security by debt security and sector by sector.

That caution is central to her view. Misra said investors need to assess whether a company has taken on too much debt. She also said she is concerned that higher interest rates could hurt the housing market.

What positioning did Misra say her team was taking?

Misra said her team had increased some exposure to double-B and single-B rated debt after high-yield spreads widened. Those comments describe the team’s positioning, not a specific change in the JPMorgan Core Plus Bond ETF, which Misra co-manages.

She also said the team had begun adding duration in the preceding days because it believed the rate move might be nearing its end. Duration is a measure of a bond portfolio’s sensitivity to interest-rate changes, according to a Morningstar report on the JPMorgan Core Plus strategy.

The distinction between Misra’s 6.5% example and fund data matters. As of Aug. 31, the JPMorgan Core Plus Bond ETF, ticker JCPB, reported a 4.96% 30-day SEC yield and a 5.97% gross yield to maturity, according to its fact sheet. Those are separate measures from the yield Misra cited in discussing high-quality corporate credit.

What does JCPB hold?

JPMorgan says JCPB primarily invests in investment-grade bonds, while retaining the flexibility to hold up to 30% of assets in below-investment-grade securities and up to 25% in foreign securities. The fund reported an average duration of 5.89 years as of Aug. 31.

Its reported credit exposures included 14.2% BBB-rated debt, 10% BB-rated debt, 2.2% B-rated debt and 0.2% rated CCC or lower. The fund’s fact sheet warns that past performance does not guarantee future results, and that investment returns and principal value fluctuate. Investors should view Misra’s thesis and the fund’s dated holdings as information about a market view and a portfolio, rather than a personalized investment recommendation.

This story draws on original reporting from CNBC.