Retail investors fell out of love with US bank loans this year, but demand from issuers of collateralized loan obligations (CLOs) has remained strong. New regulations may change that. Should investors be concerned? We think so. (more…)
Policy backdrops and growth trajectories around the world are showing increasing signs of divergence. Yet many bond investors continue to congregate in a few selected pockets of the fixed income universe. In our view, it’s a perfect time to reconsider diversification tactics. (more…)
By Ivan Rudolph-Shabinsky (pictured) and Petter Stensland
A surge in capital expenditures and leverage in the energy industry could end badly for some companies and their creditors. While select opportunities exist, we think bond investors should think carefully before they blindly bankroll today’s North American energy revolution.
At a time when US defined contribution plans are seeking to control risk and enhance returns, hedged global bonds can improve outcomes for participants and sponsors. But how do plans incorporate global bonds in core menus and target-date funds? (more…)
This is the time of year when, in almost every American household, the tinkerer in the family eyes the recipe box. Certain venerable traditions will make it to the Thanksgiving table intact. A cousin or an in-law is sure to bring an entirely new dish. And some traditional plates could use some freshening up. That’s the case with core fixed income. (more…)
By Michael DePalma (pictured) and Arnab Nilim
Multi-asset strategies like risk parity owe much of their popularity to their ability to navigate the global financial crisis. Lately, critics have cited levered bond returns as the driver—and as a looming headwind. We think they’re missing a key point.
If you’re worried about the recent spike in bond market volatility, we’ve got a bit of advice: Don’t be. There are plenty of other risks—chiefly credit quality and flatter yield curves—that are causing shakeups in some corners of the fixed-income world. Happily, there are things you can do about them. (more…)
With a US housing recovery in full swing, this may be a good time for investors to consider securities backed by residential real estate. We think they’re an attractive way to diversify exposure to high-yield bonds and other risk-seeking assets.
In late 2013, the 10-year US Treasury yield hit 3%, spooking investors who thought the bond bubble was bursting. Prognosticators urged investors to abandon bonds. And then—they waited. (more…)
With the US dollar poised to rise, there’s never been a better time to reposition into global bonds as your core mandate. But when you do, it’s critical to fully hedge that global portfolio against currency risk. (more…)