Where to Find Value within Fixed Income Today
High yield bonds offer decent value within fixed income. Another way to find income is through income funds that are available in the markets today.
The ten-year German and French government bonds are trading at below 1%, while the ten-year gilt is yielding 2%. The ten-year US Treasury is currently trading at 2.3%.
BlackRock (BLK) is the largest asset management firm in the world. BlackRock generated $10.9 billion of inflows in the iShares ETF segment in 2Q15.
BlackRock is currently selling illiquid high yield bond ETFs to the public. Investors are perceiving them to be high quality since they’re issued by BlackRock.
Carl Icahn believes that another 2007-like crisis could be in the making. He thinks asset management companies like BlackRock are “extremely dangerous.”
Last week brings the total net outflows from leveraged loans funds to $5.1 billion year-to-date.
The US leveraged loans market saw an allocation of just $575 million worth of senior loans in the week to July 17.
Investor flows in high yield bond funds were positive for the second consecutive week last week.
Junk bond issuers returned to the primary market in the week ended July 17 as the situation in Greece stabilized, but remained cautious due to market volatility.
Natural gas and oil exploration company WPX Energy (WPX) issued high yield bonds worth $1.0 billion last week, the largest of the period.
The three US equity indices that we review in this weekly series rose in the week ending July 17. Apart from economic indicators, markets also focused on corporate earnings.
Favor credit over duration as interest rates rise. Look for tactical opportunities within fixed income.
As yields fell, the price of investment-grade bond ETFs rose due to the inverse relationship between prices and yields.
PepsiCo (PEP) issued high-grade bonds worth $3.25 billion. The A1/A rated bonds were issued via the following five parts.
Investment-grade corporate bonds worth $55.4 billion were issued in the primary market in the week ended July 17, 2015. The number of issuers rose to 20 from 17 in the previous week.
Yields on investment-grade corporate bonds fell to a low of 2.84% in mid-April. US corporates and financials thronged the primary US bond market due to these low yield levels.
US economic indicators drove movement in investment-grade bond yields last week. A rise in gasoline prices led to an increase in US consumer prices in June.
leveraged loans funds saw inflows for the week ended July 8, making it the first in six weeks to witness inflows. The quantum of inflows was $18.5 million compared to net outflows of $365 million in the previous week.
The US leveraged loans market saw an allocation of $60.5 billion worth of senior loans in June 2015. This was 15.8% lower than the $71.9 billion priced in May 2015.
The US leveraged loans market saw an allocation of $1.6 billion worth of senior loans in the week ended July 10. This was 76.7% lower than the $6.8 billion priced in the week ended July 2.
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