Elana Margulies-Snyderman of EisnerAmper conducted an interview with Liridon Gila, the Co-CIO of Sawgrass Asset Management, to get his thoughts on active equity and fixed income. 

Gila starts with a broad view by trying to identify where we are in the economic cycle, and how monetary and fiscal policy will move in reaction which causes its own ripple effects for markets and the economy.

Currently, he sees a challenging environment for risk assets as the odds of a recession continue to rise. Despite this, the Federal Reserve is maintaining its hawkish posture and pulling liquidity from the market. Fiscal policy has been a major driver of the economy over the last couple of years, but this is unlikely to continue to be a tailwind given a divided Congress.

While he is wary of equities, he is more optimistic about fixed income. This is primarily because he expects that inflation has already peaked which would be a healthy tailwind for bonds. Additionally, he sees a normalization of inflation and rates over the next couple of years which means that current yields are quite attractive and unlikely to remain at these lofty levels. 

Finsum: Active fixed income is a great strategy for the current market given rising odds of a recession, peaking inflation, and very attractive yields.