Summary
- Market Backdrop: Q1 was dominated by policy uncertainty as expectations for deregulation shifted to concerns about spending cuts and protectionist trade policy.
- Market Impact: Equity volatility weighed on stock returns, while bonds performed well amid declining interest rates.
- Rates & Duration: The Bloomberg Aggregate Index gained +2.78%, with falling yields across the curve; modestly longer duration supported relative results.
- Credit Conditions: Investment Grade credit spreads widened 14 basis points, reflecting heightened market volatility.
- Positioning: The strategy remains defensively positioned in credit, with flexibility to add high-quality corporates if spreads widen further.
- Outlook: Policy-driven volatility is expected to persist, reinforcing a focus on consistency, discipline, and risk management.
Video Transcript
Hello, I’m Brandon Zureick, Senior Managing Director at Johnson Asset Management.
It’s no surprise that the first quarter was dominated by policy headlines.
While markets ended last year convinced President Trump would run his 2016 playbook, the first quarter was a reminder that this a whole new ballgame.
Optimism for deregulation and tax cuts turned instead to concern over large scape spending cuts and protectionist trade policy.
While volatility dampened stock market returns, it was a relatively good quarter for bonds.
The Bloomberg Aggregate Index rose 2.78%, as interest rates fell across the yield curve.
Our strategies’ modestly longer duration was a tailwind for relative performance during the quarter.
Credit was not immune from market volatility, as Investment Grade spreads finished the quarter 14 basis points wider.
Looking forward, we believe that policy induced volatility is likely to persist.
While we remain defensive in our overall credit allocation, spread widened may serve as an opportunity to add high-quality corporate bonds at attractive valuations.
As always, we remain focused on delivering consistent results, especially in the face of volatility and uncertainty.
If you have any additional questions, please reach to a member of the JAM team.
Published 04/21/2025
Johnson Asset Management (JAM) is a division of Johnson Investment Counsel, Inc. (“JIC”), an independent and privately owned Midwestern based investment advisory firm registered with the Securities and Exchange Commission. Johnson Asset Management manages institutional separate account portfolios for a wide variety of for-profit and nonprofit organizations, public agencies, public and private retirement plans, and personal trusts of all sizes. It may also serve as sub-adviser for mutual funds. JIC’s fees are available upon request and may be found in our Form ADV Part 2A. Performance data quoted herein represents past performance. Past performance does not guarantee or indicate future results. All data is current as of March 31, 2025 unless otherwise noted. Returns and net asset value will fluctuate. To determine if this strategy is appropriate for you, carefully consider the investment objectives, risk factors, and expenses before investing. Individual account management and construction will vary depending on each client's investment needs and objectives. Investments employing JIC’s strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by any Bank or any Bank affiliate, and MAY lose value, including possible loss of principal. Johnson Asset Management claims compliance with the Global Investment Performance Standards. The Institutional Core composite includes all fee paying, fully discretionary, actively managed institutional fixed income portfolios with a minimum value of $500,000 and an investment objective of broad investment grade, taxable fixed income, benchmarked against the Bloomberg U.S. Aggregate Index. The US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar denominated, fixed-rate taxable bond market.
JAM’s policies for valuing portfolios, calculating performance and preparing compliant presentations, as well as a complete list of composite descriptions are available upon request. Please contact our office at 513.389.2770 or 3777 West Fork Road, Cincinnati, OH 45247. All returns reflect the reinvestment of investment income (dividends and/or interest) and capital gains. Valuations and returns are stated in U.S. dollars. Trade date accounting is used. Portfolio returns are calculated using time weighed return methodology on a monthly basis. Net returns shown reflect gross performance less the highest fee schedule for this strategy. Actual client returns would also be reduced by brokerage commissions, custodial fees, and other client paid expenses detailed in JIC’s Form ADV Part 2A.
