Investors are favoring short-term fixed-income investments due to concerns about volatility

From CNBC: 2025-06-01 10:58:00

Investors are advised to stick to the shorter-end of the fixed-income market due to concerns and volatility. The 3-month T-Bill is yielding above 4.3%, with the 2-year at 3.9% and the 10-year at 4.4%.

ETF flows show ultrashort opportunities are attracting investors. Vanguard’s S&P 500 ETF has taken in more money than others. Warren Buffett doubled Berkshire Hathaway’s ownership of T-bills, now owning 5% of all short-term Treasuries.

Volatility in bonds is high, with long-term treasuries and corporate bonds posting negative performance since September. Fed paused rate cuts amid inflation concerns from tariffs. Sohn advises against anything with a duration longer than seven years.

Gallegos warns investors aren’t diversifying with bonds, still addicted to tech-heavy indexes. Stock market volatility is high, with S&P 500 hitting record levels in February, then falling 20% in April before recovering. Sohn suggests looking beyond US equities to international markets for diversification.

International equities are performing well, with iShares MSCI Eurozone ETF up 25% this year and iShares MSCI Japan ETF up 25% in the last two years. Overseas assets are becoming more popular among investors.

Read more: Investors are piling into big, short Treasury bets with Warren Buffett