Credit Crunch: Wellington’s Fitzgerald on Convexity Over Carry

“When you just think about the distribution of outcomes on corporate bonds from these levels of spreads, the cost of getting a few of them wrong can wipe out a quarter, or even a year of alpha in these sort of lower-return opportunity type environments,” says Connor Fitzgerald, fixed income portfolio manager for Wellington Management. Fitzgerald joins Bloomberg Intelligence’s Noel Hebert on this episode of the Credit Crunch podcast and discusses his cautious but constructive credit view, with spreads offering limited compensation for risk, particularly in investment grade (IG). The two talk defensive positioning, disciplined security selection, positive convexity and patience for better entry points to drive alpha, as well as longer-term IG supports including demographics and higher yields. AI-driven corporate capex funding and potential investor indigestion, fiscal dominance and balancing bottom-up and top-down views are also discussed.