Portfolio Manager Insights

Managing risk amid uncertainty around the Fed’s independence

As scrutiny remains on the independence of the U.S. Federal Reserve, Fidelity’s Michael Plage is taking a cautious approach to positioning fixed-income investments.

By: Michael Plage
Updated: 3/30/2026
  • Alongside ongoing concerns about inflation and economic growth, bond investors are vigilant about any threat to the independence of the Fed. Fidelity Portfolio Manager Michael Plage believes it is prudent to position Fidelity Advisor® Investment Grade Bond Fund close to its benchmark until his team gains more clarity about the central bank, fixed-income markets stabilize and investors regain confidence.
  • “In pursuing its dual mandate of price stability and maximum employment, the Fed is a key driver of bond valuations, interest rates and even equity performance,” says Plage, who co-manages the fund. “But with recent political calls for the Fed to lower its short-term interest rate sparking discussion about the central bank’s autonomy, I believe it is wise to take a cautious approach.”
  • Launched in 1971, the fund is a core fixed-income strategy seeking to provide investors one-stop access to a diverse group of U.S. high-grade bond sectors. Plage and his co-managers concentrate on areas where they see the potential to repeatedly add value, including asset allocation, sector and security selection, yield-curve positioning and opportunistic trading.
  • A sharp focus on risk management is crucial amid the macro uncertainty, according to Plage. “Any perceived shift in the Fed’s independence could introduce ambiguity that is on par with other risks facing bonds, including global trade tension,” he says.
  • Accordingly, the fund holds a large allocation to U.S. Treasurys (as of February 28, 2026), with Plage noting their relative value and liquidity.
  • Among corporate bonds, there’s an emphasis on short-duration holdings because they tend to offer more-favorable spreads per unit of interest-rate risk than longer-term counterparts, he explains.
  • The team also is favoring shorter-duration asset-backed and commercial mortgage-backed securities, according to Plage.
  • In addition to the Fed’s interest-rate policy, Plage says he is keeping an eye on the Fed’s regulation of banks and management of its balance sheet, two factors that may significantly impact supply and demand and the shape of the yield curve.
  • “Until we have greater clarity on the Fed’s path, we plan to hold steady with the fund’s conservative positioning,” he concludes.
 
FEATURED FUND

Fidelity Advisor Investment Grade Bond Fund (FGBPX)

Seeks a high level of current income.

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