Recently, U.S. media reported that former President Donald Trump has been buying large amounts of corporate bonds through his trust fund, spanning industries from energy to finance to infrastructure—sectors that align closely with his policy preferences. According to financial disclosures, he has completed over 175 bond transactions since late August this year, with a lower-limit purchase amount exceeding $82 million, and market estimates suggest the total could be over $300 million. This move has not only garnered market attention but also sparked renewed discussions on wealth management, policy influence, and market ethics.

Why Does Trump Prefer Corporate Bonds? Behind the Financial Logic and Political Considerations.To understand why Trump is favoring corporate bonds, it's important to first grasp the role of corporate bonds in asset allocation and how policy can amplify their potential returns.

What Are Corporate Bonds? A Flexible Leverage in Fixed Income

Corporate bonds are debt financing tools issued by companies to raise capital. When investors buy corporate bonds, they are essentially lending money to the company in exchange for periodic interest payments and the repayment of principal at maturity. Compared to government-issued bonds, corporate bonds carry more credit risk, but they generally offer higher yields. Compared to stocks, corporate bonds provide more stable returns and have a higher claim priority in case of bankruptcy.

For example, if an energy company issues a 5-year corporate bond with a coupon rate of 5%, an investor who buys $10,000 worth of bonds would receive $500 in interest annually, with the risk being whether the company can repay the debt on time. For institutional investors or large-scale investors who prefer stable returns, corporate bonds are a solid investment option.

Risk and Ratings: Credit Evaluation Behind the Yield

The attractiveness of corporate bonds is closely tied to their credit ratings. Credit rating agencies such as S&P and Moody’s assess a company’s ability to repay its debt and assign ratings to bonds, which can be investment-grade (e.g., AAA, AA) or speculative-grade (e.g., BB and below, high-yield/junk bonds). A 10-year BBB-rated corporate bond usually has a yield of less than 4%, while BB-rated or single-B bonds may offer returns of 6% to 8%.

Many of the bonds Trump has purchased are from companies with credit ratings on the edge, but these companies operate in industries that align with his policy focus, such as energy (especially shale oil), financial services, and infrastructure. If policy support returns to these sectors, these companies’ profits or credit ratings may improve, pushing bond prices up and creating potential capital gains.

Why Is Trump “Betting” on Corporate Bonds?

Trump’s administration was known for policies such as tax cuts, loosening energy regulations, and encouraging manufacturing to return to the U.S. Even after leaving office, he has continued to allocate his assets to these sectors, demonstrating strong confidence in the return of these policies. According to disclosures, the corporate bonds he has purchased include those from industry leaders like Broadcom, Qualcomm, Meta, Home Depot, CVS Health, and Morgan Stanley. These companies are key beneficiaries of tax cuts, infrastructure spending, and energy investments, which align with his policy direction. This strategy of anticipating policy support and positioning bond assets in advance is akin to establishing a “bullish position” on policy returns at a low cost.

Furthermore, investing in corporate bonds helps avoid the potential conflicts of interest associated with holding stock in companies. As a public figure, owning shares in companies could be perceived as benefiting from policy decisions, whereas bonds—though subject to some volatility—pose a lower risk and are less directly tied to the business’s interests.

Market Controversy: Investment Strategy or Conflict of Interest?

While Trump’s investment strategy has its logic, there are still concerns in the market regarding his bond transactions. On one hand, the disclosure system only requires reporting the range of investment amounts, not specific figures. On the other hand, since the bond issuers and their respective industries are closely tied to government policy, does a former president with ongoing political influence investing heavily in related industry bonds constitute a potential conflict of interest? Although there are regulations in place, they are not stringent. For instance, the U.S. Government Ethics Law requires officials to disclose asset transactions but does not mandate the creation of a blind trust. Trump’s trust is managed by his children, which, while seemingly independent, may still not fully eliminate the potential for conflicts of interest.

What Can Ordinary Investors Learn from This?

Ordinary investors can learn from Trump’s corporate bond investments not just the scale of his transactions or speculative nature, but a comprehensive approach to analyzing policy, industry, and credit. First, they should focus on the direction of government policies, as these can create new opportunities for bond investments, much like the Chinese government’s push for equipment upgrades and green development. Additionally, understanding credit ratings and company fundamentals is essential. Investors should look for issuers with stable ratings, strong risk management, or those in the process of improving their credit quality. Finally, managing risk effectively is crucial. While corporate bonds tend to provide relatively stable returns, they remain sensitive to interest rate changes, macroeconomic fluctuations, and liquidity constraints. A well-diversified portfolio, with bonds of different durations and risk levels, tailored to one’s risk tolerance, is key to sound investment management.