In today’s rising interest rate environment, Loomis Sayles Vice Chairman Dan Fuss says he would tilt the stock-bond mix toward equities. This according to a recent article in Financial Advisor magazine.

The article reports that Fuss, who ran Yale University’s endowment in the 1970s, does not think stocks are cheap, but has some “serious concerns about bonds,” citing a “distorted relationship” between long-term bonds, high-yield bonds and yield-oriented stocks. He adds that as income-hungry investors gravitate to the junk bond market, he sees the high-yield market behaving strangely—for example, last month certain junk bond indexes fell below 4% for the first time in history.

While both stocks and bonds have performed well for decades, Fuss suggests that the long-term outlook for bonds is more worrisome than it is for stocks. Inflation, says Fuss, could potentially surprise investors “on the upside.”

According to Fuss, deglobalization was already in process before the pandemic, but Covid-19 forced many CEOs to “rethink their supply chains with an eye to bringing them closer to home.” While he notes that this process will probably take about five years to accomplish and will increase costs, a number of U.S. companies were already focused on moving production out of Asia and “near-sourcing” in Mexico.

Fuss argues that is it possible to shift funds out of bonds and into stocks without sacrificing yield, the article states.