We think investors who build laddered portfolios to protect against rising rates will be disappointed—by locking in low yields with traditional ladders or by hidden risks of higher-yielding ladders. In our view, actively managed portfolios are better able to take advantage of changing markets.
Posted by Jorgen Kjaersgaard (pictured) and Steve Hussey of AllianceBernstein (NYSE: AB)
European banks are issuing new subordinated bonds that can be written off in a crisis. For investors who are willing to take the risk, our analysis suggests these bonds may provide a way to beat the low returns in today’s corporate bond market.
Asia’s three biggest economies—China, India and Japan—are carrying out reform programs. Taken individually, these may do little to excite investors’ imaginations, but taken together, they become much more interesting.
Chasing returns into—and out of—specific credit sectors happens so often in bond markets that it hardly rates a raised eyebrow. But running with the herd can be risky, which is probably why Federal Reserve officials reportedly have discussed slapping exit fees on bond funds to avoid a disorderly rush to the exit. (more…)
In early 2013, we urged investors to take a hard look at the interest-rate risk in their bond portfolios. If they didn’t do it then, they have a chance to do it now. (more…)
This year’s leveraged buyouts (LBOs) are being financed with more debt and include fewer protections for creditors. Regulators, the press and market participants are watching this closely, and so are we. But we don’t think it’s worth losing sleep over—at least not yet.
Posted by Gershon Distenfeld (pictured) and Ivan Rudolph-Shabinsky of AllianceBernstein (NYSE: AB)
Many investors have taken on more risk in their quest for higher returns—especially as signs have pointed to interest rates staying stable until next year. But two key elements are often overlooked: default risk and underwriting standards.
Posted by Michael DePalma (pictured) and Philip Chasparis of AllianceBernstein (NYSE: AB)
Even as the US Federal Reserve has continued to taper bond purchases and hint at eventually tightening monetary policy, long-term US Treasury yields have not only continued to fall, but outperformed all other maturities from two-year to 10-year bonds. Investors shouldn’t bank on them falling much further.
Jorgen Kjaersgaard (pictured) and John Taylor
Investment-grade bonds issued by nonfinancial firms in Europe’s peripheral countries have had a great run but now look expensive. In our view, government bonds from the likes of Spain and Italy offer better value for investors who want peripheral exposure. (more…)
Investors who rush into high-yield bank loans seeking competitive returns might find the yield they chase is hardly worth the pursuit. Loan yields—currently quoted at about 5%—seem attractive at first blush, but we think there’s a lot less here than meets the eye.