By Steve Garmhausen

It has been a tricky year to navigate the bond market, with whipsawing interest-rate expectations leading to higher bond-price volatility across nearly all sectors. The war in Iran, with its ensuing oil--price shock, has been a catalyst, but it comes on top of elevated debt issuance, lingering inflation pressure, and uncertainty about Federal Reserve policy. So for this week's Barron's Advisor Big Q, we asked investment advisors to share their fixed-income recommendations, both for capital preservation/income, and for growth and total return.

Darrell Cronk, chief investment officer, wealth and investment management, Wells Fargo: There are a couple of places that really make sense right now for safe, stable, but decent income. First is Treasuries or governments in the two- to five-year range. You're getting yields in the 3.7% to 3.9% range, obviously very minimal credit risk, and limited duration risk. It's kind of a risk-free income core that replaces cash right now. I would also say look at high-quality investment-grade bonds -- single-A to triple-B in the three- to seven-year time horizon. You're going to get all-in yields around 5%. Spreads are about 80 to 90 basis points right now, which are relatively tight by historical standards, but very serviceable. The coupon is going to dominate your total return. The default risk remains low. You don't need spread tightening to win in that space. Third are tax-advantaged municipal bonds, and I would stay up in quality here. This is probably going to be close to a record year of issuance. But particularly if you go out a little ways on duration maturity, you're getting nominal yields in the 4%-to-5% range, which, depending on your tax bracket and your state, means tax-equivalent yields between 6% and 7%.

For growth, I'd again say intermediate-duration bonds, because it's basically like a free option right now. The curve has re-steepened somewhat since last month. Cash yields continue to fall in that five- to seven-year maturity range. You're getting roll-down as the securities get closer to maturity [they become shorter--maturity bonds that the market usually prices at a higher value if yields stay the same], and you're getting convexity right now [meaning prices could rise more than anticipated if yields fall]. Another idea on the growth side that I'm excited about is the distressed or opportunistic credit space. It's well documented that private-credit stress is emerging. A lot of the retail semiliquid vehicles have started to put up prorations and gates. Those valuations typically lag reality, so they're probably going to face pricing pressure. You're already seeing some of those structures wanting to sell bonds in the private BDCs and interval space. If and when some of those structures become forced sellers, somebody has to be the buyer. We think opportunistic and distressed credit make a ton of sense to be raising capital and having dry powder ready over the next 12 to 24 months.

Anna Rathbun, CEO, Grenadilla Advisory: I've kept the fixed--income portfolio on the shorter--duration end. The shorter you go, the safer it generally gets. Under five years is a sweet spot for me. You can still get higher yield than cash if you stick with government agencies, Treasuries, and a bit of corporate credit. If you go shorter on the duration timeline -- down to two or three years -- then you can afford to take higher credit risk. Here we're talking about things like emerging market debt and high-yield bonds. If you use active managers who are doing credit research and looking for dislocations and mispriced securities, you can buy higher--yielding bonds at a discount and then wait maybe two years for them to mature. The idea is that you get your principal back, and usually junk--rated companies aren't going to default with just a year and a half or two years left, because that would really hurt their ability to borrow in the future. You still have to do a lot of credit research; I rely on my manager partners to do that really well.

I'm going to say something unpopular: I still like private credit. It has been getting a really bad rap, and I don't think the conversation has been balanced. In private credit, how you choose managers is everything. If you choose private credit players that have slipped on underwriting quality, you're going to get write--downs and stress. I talk to the private-credit managers on my list regularly. I ask about the environment they're investing in, what types of securities or companies they're lending to. I check for diversification in the portfolio to make sure they're not too concentrated -- say, just in software -- and that they're diversified across the U.S. economy. I want tight underwriting standards -- no payment--in--kind structures, no light--covenant deals. That's all about manager quality and deal selection. Also, private credit isn't just direct lending to corporations. There's asset--backed finance and other ways to get yield without being solely exposed to U.S. corporates. Some managers will diversify the portfolio across direct lending, asset--backed, and other credit, which helps diversify the risk.

Patrick Fruzzetti, managing director, Rose Advisors (Hightower): Municipal bonds, because they're one of the safer options. Treasuries, from our standpoint, are really just cash management. Today you see a lot of triple-A municipals, even in New York and California, trading as a percentage of the taxable Treasury rate. Right now they're around 60% to 70% of the Treasury rate, versus 70% to 80% historically. So on a relative basis those are attractive levels. If a client is in the highest tax bracket in, say, California or New York City, and you get, for example, 2.9% on a seven--year bond in New York City, and they're in a 50%-plus combined tax bracket, that's roughly a high--5% to around 6% tax--equivalent yield. So municipal bonds in that intermediate window, with five- to 10--year duration, make sense. And high--quality corporate bonds -- triple-B and above -- are still reasonable here.

If you want not just yield but also a little more potential capital appreciation, you have to move into assets where you take more credit risk, liquidity risk, or interest--rate risk. One area we've looked at, especially given the mess in private credit, is interval funds. We didn't really traffic in traditional private credit; I never felt you were properly rewarded for the risk and illiquidity. But there are some interesting interval funds, which generally let you redeem quarterly. One in particular that I've used for clients for the past three to four years invests in real estate debt. At the end of the day, you're backed by the underlying real estate. Some exposure is to public commercial mortgage-backed securities, some to private loans they acquire. What I like is the relatively short duration -- about two years -- and an annual dividend around 9%, plus 1% to 2% growth, so you're looking at roughly a 10% annualized return over the past few years. The fund is the Forum Real Estate Income Fund, and the ticker is FORAX.

Sara LaClair, senior portfolio strategist, EP Wealth: We think an attractive place to look for safe income is a traditional bond ladder built with high--quality corporates and Treasuries. With individual bonds, investors receive contractual coupon payments, often semiannual, which provides reliable income and predictable cash flows. That helps smaller and larger investors alike look past the noise of rate moves and know they'll receive their coupons and, at maturity, their par principal. The safety comes from both the structure of the ladder and the credit quality underneath it. Diversification across maturities and issuers, paired with a high degree of certainty about getting your principal back at maturity, is what we lean on. When you're investing in investment--grade, high--quality corporates -- triple-A, double-A, single-A, triple-B -- and Treasuries, there's very little credit risk. That's why we view this as a capital--preservation and safe--income solution.

When we shift to growth opportunities within fixed income, we start with the individual client: their time horizon, and the role bonds are meant to play. We view fixed income primarily as the steady income provider that reduces volatility created by stocks. Traditionally, we look to equities and other risk assets for growth. For taxable investors, municipal bonds are particularly attractive right now. For clients in high--tax states, the further you go out on the muni yield curve, the higher the tax--equivalent yield relative to corporate or Treasury bonds. And if the yield curve flattens or comes down, for example, post--conflict, there's potential for capital appreciation on top of the income. It isn't appropriate for everyone, and not all investors will want to go that far out on the curve, but it's an area where we see marginal upside beyond what you'd get in a plain core bondholding.

Write to advisor.editors@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 15, 2026 15:31 ET (19:31 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.