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Byline: MURRAY COLEMAN
After inverting in December, the yield curve resumed a less negative, flatter shape last month.
As such, investors in shorter-term bond funds took less of a hit than those further out on the yield curve.
Those willing to take even more of a chance with lower credit corporates did even better in January.
Short-term Treasury funds returned 0.13% in the month, according to preliminary Lipper data. By contrast, intermediate U.S. government-bond focused funds finished flat. Longer-term general Treasury funds fell 0.7%.
"Yields between two-year and 10-year notes moved pretty much in tandem," said Jay Mueller, a portfolio manager at Wells Capital Management, which runs $63.3 billion in bond assets. "So the curve stayed flat, with yields on all ends moving up."
That was prompted by the Fed's 14th straight quarter-point hike in short-term rates on Jan. 31. "You're pretty much getting a 4.5% yield now in Treasuries no matter how much risk you take," said Mueller. "We've been positioning our portfolios with shorter durations than their benchmarks."