Summary
- Performance: Johnson Core Fixed Income returned 0.68% net of fees, slightly ahead of the Bloomberg Aggregate Index.
- Market Environment: Strong economic data and AI-driven investment supported risk assets, while rates moved higher.
- Credit Positioning: High-quality corporate bonds benefited from tightening credit spreads.
- Interest Rate Impact: Longer duration and yield curve positioning modestly offset credit gains.
- Risk Management: The portfolio remains conservatively positioned amid tight credit spreads.
- Outlook: Focus remains on high-quality fixed income opportunities while monitoring inflation and Fed policy.
Video Transcript
The second quarter was defined by a sharp reversal in risk sentiment.
Solid economic data, resilient corporate earnings, and continued momentum in AI capital spending provided a constructive backdrop for US investors.
Confidence was further supported by easing of geopolitical tension, helping to propel the S&P 500 to its strongest quarterly gain in six years.
Fixed income returns were subdued, however, as interest rates rose as investors weighted the outlook for inflation against volatile energy prices, solid economic data, and rising corporate earnings.
Additional uncertainty surrounding the future direction of Fed policy under Chairman Kevin Warsh also contributed to persistently elevated yields.
The Johnson Core Fixed Income strategy returned 0.68% net of fees during the quarter, slightly outpacing the Bloomberg Aggregate Index return of 0.67%.
The Strategy’s emphasis on high quality corporate bonds provided a tailwind as corporate spreads tightened throughout the quarter.
That benefit was mostly offset by modestly longer duration and yield curve positioning.
Looking forward, we remain conservatively positioned.
While economic fundamentals are solid, credit spreads remain near cycle lows and offer limited compensation for taking additional credit risk.
Continued debt issuance is a risk to corporate spreads, as meaningful increases in supply are likely needed to continue to fund growing AI buildout.
While June’s soft inflation print provides the Fed with temporary room to leave interest rates unchanged, incoming inflation data will be an important barometer to judge the likelihood of additional rate increases toward the end of this year.
As always, should you have any questions please reach out to a member of the Johnson team.
Published 08/10/2026
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 June 30, 2026 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. GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. 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.
