Summary

• With Treasury securities now comprising roughly 47% of the Bloomberg U.S. Aggregate Bond Index, up from 22% in 2002, core bond investors may be taking on too much concentration in U.S. government debt than they realize.
• Persistent fiscal deficits nearing $2 trillion and potential increases in Treasury coupon issuance in FY2027 could push the Agg’s Treasury weighting above 50%, further reshaping the risk and yield profile of traditional core fixed income allocations.
• Investors seeking a more balanced core bond exposure may consider the WisdomTree Yield Enhanced U.S. Aggregate Bond Fund, which uses a rules-based approach to reduce Treasury concentration while maintaining familiar investment-grade risk characteristics and enhancing yield potential.

By Kevin Flanagan

Typically, an investor’s traditional bond portfolio begins with a cornerstone, or core holding, of some sort. From either a strategic or tactical perspective, a core fixed income position provides the investor with some ballast to help

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