Heading into 2011, there was widespread belief that equities would outperform bonds and that the US economy would grow in the range of 3.5% to 4%.

But the year has turned out far differently than expected as the US economy slowed and worries spread that either the United States or Europe — or both — would tip into a recession.

The uncertainty has prompted investors to seek out safe haven assets, like fixed income, despite the low rate environment.

To provide an update on the fixed income markets Russ Koesterich, iShares Global Chief Investment Strategist, and Matt Tucker, Head of iShares Fixed Income Strategy, hosted a conference call with financial advisors last month.

On the call, Russ explains why he has a neutral view on the Treasury market in the near term and says that he would be underweight US sovereign debt in the long term. He favors investment grade bonds and munis, explaining that investment-grade bonds offer a rich yield relative to Treasuries, while munis offer the potential for a rich, after-tax yield.

Matt outlines the recent trends he is seeing in the markets, including the desire among investors for increased risk management and transparency in their fixed income holdings. He explains that investors are looking for ways to customize their fixed income portfolios and are using fixed income ETFs to access different segments in the market, like corporate or municipal bonds.

Click here to access the entire call and listen as Russ and Matt respond to advisors’ questions.

Bonds and bond funds will decrease in value as interest rates rise. A portion of the Fund’s income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains, if any, are subject to capital gains tax.