"We think now investors should be moving cash off the sidelines and going into longer-term fixed income assets." Second, investors benefit from using fixed income as a hedging component against market downturns, meaning that bonds are generating attractive interest income and longer-dated issues will see price appreciation as rates fall. However, certain corners of the fixed income market are looking attractive, and they could play a role in a diversified fixed income sleeve. For starters, Vishal Khanduja, head of broad markets fixed income at Morgan Stanley Investment Management, pointed to agency mortgage-backed securities. "Fixed income allocations may provide ballast to investors' portfolios to get through volatile periods with a little more stability."

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Persons: Dominic Pappalardo, Pappalardo, Vishal Khanduja, Khanduja, Eaton Vance, they're, Morningstar's Pappalardo Organizations: Morgan Stanley Investment Management, Bond, U.S Locations: Mexico