Wealth CIOs split on duration with Treasury yields at two-decade highs

The one CIO in this group describing a change in duration is lengthening it. "We've been underweight duration in most client portfolios for several years, and we're now gradually moving closer to a neutral duration stance as we assess where rates settle," said Matthew Liebman, founding partner and CEO of Amplius Wealth Advisors ^[6], a Blue Bell, Pa., RIA with $1.7 billion in assets ^[8]. "We are not chasing the move, but we no longer see the same asymmetric case for staying as short," he said ^[7].

In Treasuries the short end still wins. Allocators are concentrated there partly because the spread between two- and 10-year yields is minimal, according to WealthManagement.com ^[9]. When a two-year note pays close to what a 10-year pays, the extra eight years buy price risk and little added income. "I think looking for opportunities on the long end is a low-success strategy right now given the overall level of leverage in the market," said Cyrus Amini, CIO of Hyphen Wealth Management, a $125 million RIA in Lafayette, Calif. ^{[10] [12]}. "Global yields are converging on an upward path, with massively more supply versus history. I continue to focus on the short end of the curve and floating rate debt," he said ^[11]. Fifth Third Wealth Advisors, with about $8 billion ^[14], sits between the two. Its core allocation includes "high-quality short-to-intermediate-duration bonds," CIO Chris Osmond said ^[13].

Maturity is better paid in municipal bonds, where yields are more attractive in the 10- to 15-year range ^[15]. "If you look at the high-grade yields, especially at the index level, you're looking at 6% on a tax-free basis," said Christopher Gunster, head of fixed income at Fidelis Capital, a Tampa RIA with about $2.3 billion ^{[16] [17]}. "If you look at the tax-equivalent yield, it's close to 10%." A tax-equivalent yield divides the tax-free yield by one minus the investor's tax rate, so turning 6% into 10% assumes a combined marginal rate of about 40% ^[1]. A client paying less at the margin gets a smaller equivalent. The muni case has to be priced household by household.

WealthManagement.com's framing is that higher yields let investors take less credit and duration risk for returns that beat inflation ^[3]. The credit half shows up at Open Arc Corporate Advisory, a Merrill Lynch breakaway with more than $10.5 billion ^[5]. "We have tilted toward quality, trimmed exposure where spreads don't justify the risk, and kept some dry powder to add if the setup improves," said CIO Jeff Neumeyer ^[4]. Open Arc is holding cash it could put into long Treasuries or wider spreads, and waiting for a better entry.

These five firms run roughly $22.6 billion between them ^[2], from Open Arc's $10.5 billion-plus down to Hyphen's $125 million. The article does not include fund-flow data.

Should the Fed deliver the further hike the market prices by the end of 2026, and the few more it sees as possible in 2027 ^[2], short yields rise and the firms holding short paper are paid to wait. If rates settle instead, 10- and 30-year yields sitting at two-decade highs ^[1] have room to fall, and Liebman's extension earns price gains on top of income. Amini's supply case points the other way, toward long yields that keep climbing and losses for anyone who extended early.

In my view the evidence supports a narrower claim than a general move shorter. These CIOs are holding the short end in Treasuries, and at Open Arc trimming credit where spreads are thin. Where maturity is being added, it is slow: Liebman's shift toward neutral, and Fidelis's interest in high-grade munis. Amini's supply argument is the strongest case against that view. The view is wrong if the two-to-10-year spread stays minimal while the Fed keeps hiking into 2027, because then no one has a yield reason to extend.