**Fixed Income Performance Update: Q2 2024**
As of June 30, 2024, the Institutional Class of our fixed income fund delivered a net return of +1.61%, outperforming its benchmark, the Bloomberg 1-3 Month U.S. Treasury Bill Index, by +0.27%. This brings the net year-to-date absolute and relative performance to +3.54% and +0.86%, respectively.
The fund’s positive performance was driven by security selection, sector allocation, and carry, while duration detracted from returns as the U.S. Treasury curve bear steepened. An overweight allocation to Non-Agency residential mortgage-backed securities (RMBS) and Collateralized Loan Obligations (CLOs) contributed to the fund’s outperformance, as structured credit outperformed corporate credit.
The fund maintained a neutral overall risk positioning, focusing on capital preservation while selectively capitalizing on opportunities across various higher-quality credit segments. The allocation favors higher-grade sectors that exhibit lower volatility in periods of heightened economic uncertainty, including an overweight to senior tranches within securitized credit.
**Economic Outlook**
Our economic outlook has improved over the past year, with the aggregate economy showing resilience in the face of rate hikes. However, we view risks to this forecast as tilted to the downside, particularly relative to the improved expectations of the market. The probability of a Trump victory in the presidential election spiked in June, leading to increased Treasury yields and inflation concerns.
**Credit Markets**
All-in yields remain attractive relative to the last decade, although most of the compensation is coming from benchmark yields rather than spreads. Credit selection remains important given the balance of risks in our economic outlook. The summer seasonal slowdown in investment-grade corporate bond issuance was more pronounced than expected, with volume coming in at only around $40 billion.
**Risk Considerations**
Investors should be aware of the risks associated with fixed-income investments, including interest rate changes, credit risk, and liquidity risk. The fund may invest in derivative instruments, which can increase volatility and risk of loss. Additionally, investments in foreign securities, municipal securities, and real estate securities carry additional risks.
**Index Definition**
The Bloomberg 1-3 Month U.S. Treasury Bill Index measures the U.S. dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury with maturities of one to three months.
**Important Disclosures**
This material is not intended as a recommendation or as investment advice of any kind. Please read the prospectus carefully before investing. It contains the fund’s investment objectives, risks, charges, expenses, and other information, which should be considered carefully before investing. Obtain a prospectus at GuggenheimInvestments.com. The referenced fund is distributed by Guggenheim Funds Distributors, LLC.
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