March Madness: Which fixed-income category wins it all?

Round 1:

(1) Core Bond vs. (16) Emerging Markets
Emerging markets (EM) debt had the highest 2025 returns of any category. But that means EM spreads are tighter, and the entry point is too rich. Go with the chalk. Core Bond.
 

(8) High-Yield Corporates vs. (9) Inflation-Protected Bond
High-yield spreads are tight and break-even inflation is high. In other words, a lot is already priced in and neither looks attractive. Flip a coin. High-Yield advances.
 

(5) Private Debt vs. (12) Investment-Grade Corporates
With investment-grade corporate spreads near all-time tights, outcomes are asymmetric. You might pull off a close win or lose by 30. A spike in issuance from artificial intelligence hyperscalers make this a tough year to call for the 12–5 upset. Private Debt.
 

(4) Short-Duration vs. (13) Nontraditional Bond
The Fed has cut nearly 2% since September 2024, and vanilla short-duration strategies have suffered. Enter nontraditional strategies that can win in a variety of ways: security selection, playing the yield curve, and risk management. Nontraditional.
 

(6) Multi-Sector vs. (11) High-Yield Municipal
Multi-sector saw the strongest positive flows as a % of assets under management of any category. The competitive yields and diversifying exposures that made it a popular choice in 2025 remain in place for 2026. Multi-Sector Bond.
 

(3) Municipals vs. (14) Securitized
Asset-backed securities look compelling within the broad securitized landscape, but the predominant mortgage exposure is increasingly looking Treasury-like. Municipals.
 

(7) Global Bond vs. (10) Treasuries
Global bonds outperformed in 2025, but a meaningful yield gap remains between the US and the rest of the developed world. Take the higher yields, greater liquidity, and zero-currency volatility. Treasuries.
 

(2) Core Plus vs. (15) Bank Loan
Loans have struggled as of late with weaker performance and the largest outflows of any category. Core Plus.
 

Round 2:

(1) Core Bond vs. (8) High-Yield Corporates
Now is not the time to load up on below-investment-grade exposure. Wait for stress in the market to push yields higher first. In the meantime, core bond’s 4% yields are still high enough to outpace inflation and outperform staying in cash. Core Bond.
 

(5) Private Debt vs. (13) Nontraditional
Credit to private debt for better managing the transfer portal: We’re seeing a shift where many interval funds, previously classified as nontraditional, are now classified as private debt. Strategies in that space typically have had higher risk-adjusted returns over the past three years than the remaining nontraditional category, giving Private Debt the edge here.
 

(6) Multi-Sector vs. (3) Municipals
For an investor at the 37% tax rate, these two categories offer nearly identical tax-equivalent yields. The multi-sector category’s differentiated exposures and greater potential for active management pushes it over the top. Multi-Sector.
 

(2) Core Plus vs. (10) Treasuries
Core plus gives you higher yields, similar duration, and the flexibility to deploy dry powder should market dislocations lead to greater opportunities. Plus, a growing suite of active exchange-traded fund strategies in the category. Core Plus.
 

Final Four:

(1) Core Bond vs. (5) Private Debt
The core bond universe is approaching 50% Treasuries, which puts many benchmark-hugging core strategies in no-man's-land between cheap, passive, pure-play Treasury exposure and more flexible active categories that allow you to put your management fees to better work. Private Debt.
 

(2) Core Plus vs. (6) Multi-Sector
For categories like core plus, duration management can drive performance dispersion between strategies. But duration wasn’t a big factor in 2025 returns, and, unsurprisingly, we saw the lowest core plus performance dispersion in a decade. If you believe we’re still in a rangebound yield environment, you need more levers to pull to outperform. Multi-Sector.
 

Finals:

(6) Multi-Sector vs. (5) Private Debt
At this point, we’re looking for strategies that can do it all: return, yield, diversification, and active management. We see these in both categories, but the difference is liquidity. Some of the best returns in fixed income come from being nimble, and multi-sector allows you to stay aggressive on offense but more quickly transition back to defense in an up-and-down market. I’ll take the upside potential from deep credit research to uncover undervalued bonds, and a highly liquid, risk-aware approach to help protect on the downside. Being active on both ends of the floor can help turn outcomes into incomes in 2026. The Pick: Multi-Sector.

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