David L. Babson & Co.
plans to raise the credit quality of its corporate bond allocation in the coming months.
, managing director and portfolio manager of $5 billion in fixed-income assets in Boston, said he will gradually sell some high-yield double-B corporates and use the proceeds to buy Treasuries and single-A securities. While declining to name credits or quantify the shift, he said he also plans to prune his holdings in the financial and utility sectors as well and use the proceeds to buy better quality corporates. Nagle decline to explain his rationale for raising credit quality. The portfolio is currently about 18% overweight in corporates compared to its benchmark, the
Aggregate Bond Index. Overall, Nagle has about 40% of the $5 billion portfolio in corporates.
Nagle said he will also exploit some short-term tactical curve opportunities, that is, both curve steepening and flattening trades. He explained those would be typically in Treasuries to capture differences such as between the two-year and 10-year notes, or between the two-year and the 30-year. While declining to be specific on the opportunities and the asset class, Nagle said his broad strategy is to stay nimble and execute quick short-term trades that go against the grain and are not necessarily based on the consensus thinking on the direction of rates.