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The Importance of Rebalancing Your Portfolio
Rebalancing your portfolio means bringing the portfolio back to the asset allocation levels specified in the financial plan. Not rebalancing can expose you to higher risk.
Rate hike horizon: September’s jobs report was largely positive
After September’s strong jobs numbers, a Fed rate hike could be on the horizon early next year. Russ explains two equity market implications.
What are the latest secondary market trends in leveraged loans?
As leveraged loans pay interest on a floating rate basis, the continued low rates environment in 2014 has compelled investors to pull funds out of the asset class.
High-Yield Bond Funds Saw Large Inflows, Yields and Spreads Fell
Investor flows into high-yield bond funds were positive for the week ended July 6, 2016, after three consecutive weeks of negative outflows.
High Yield Bond Funds Witness Inflows in the Week to May 22
Investor flows in high yield bond funds turned positive last week. Net inflows totaled $906 million in the week ended May 22.
Must-know: Why refinancing remains the focus for leveraged loans
Unlike the previous week, last week, issuers swarmed the market with repricing deals. Nearly half of the deals were refinancing.
Pension funds saw less interest at the 2-year Treasury note auction
Apart from T-bill auctions, last week also saw auctions for $32 billion two-year Treasury notes on April 22, $35 billion five-year Treasury notes on April 23, and $29 billion seven-year Treasury notes on April 24.
Why the Fed funds rate may not increase the long-term average for a few years
The Fed funds rate has remained near zero in the aftermath of the great recession.
Why young investors are keeping cash under the mattress
Not only are young individuals scared of investing in equities, they’re also hoarding cash under the mattress in case a similar crisis should reoccur.
Why last week was again positive for the leveraged loan market
A bullish week Last week was yet another bullish week for the leveraged loan market. A total of 12 deals priced almost $13 billion worth of leveraged loans (BKLN). Extremely robust pipeline The forward pipeline stood at just over $50 billion at the close of last week. This level is the second highest since last […]
Muni Bond Investment Opportunities in the Current Environment
BUTCHER: Thank you. Do you see any specific opportunities today? COLBY: I think there are two fairly distinct opportunities for investors to consider. One is based on interest rates and interest rate outlooks. The other is based on risk that investors might be willing to assume on a credit basis. From an interest rate perspective, […]
Outflows in High Yield Bond Funds Slow Down
Net inflows in high yield bond mutual funds were negative for the second time in eight weeks. Net outflows totaled $1.0 billion in the week ended March 20.
Why issuers stayed away from high-yield debt markets
Issuance slowed to a trickle when market conditions were unfavorable in August. A number of transactions were either postponed, re-priced, or withdrawn from the market altogether. There was an increase in high-yield debt risk perceptions.
Invest in Fixed Income for Diversification and Yield
Invest in fixed income for diversification benefits. Treasuries are also less correlated within fixed income, which makes them a good diversifying tool.
Bill Gross Analyzed ‘Carry’ in Credit Risk, Volatility, and Liquidity
In his June 2016 investment outlook, Bill Gross stated that “credit risk or credit ‘carry’ offers little reward relative to potential losses.”
Why Unconstrained Bond Funds Could Be Useful Now
Unconstrained bond funds use leverage and derivatives in their portfolios, which magnifies their risk. They have exposure to both credit and interest-rate risk.
Why Your Portfolio Needs More Than Just Equities
You know your portfolio needs more than just equities. So what can complement equities in your portfolio? How many high-yield bonds you own depends on your risk appetite.
The Fed starts monetary tightening: What’s next for junk bonds?
Key implications of the Fed’s QE3 exit for junk bonds and leveraged loans The Fed’s policy statement at the end of its October Federal Open Market Committee (or FOMC) last week stressed the improving economy. In a first, it also mentioned that measures of labor market slack had reduced. The risk of inflation falling persistently […]
Why smaller oil and gas firms are foraying into high yield debt
High yield debt markets saw $6 billion worth of new supply issued across 12 transactions in the week ending October 24.
Why frontier markets are good diversifiers for your portfolio
Diversification: Finally, companies in frontier markets tend to just focus on demand in their local countries and thus are less tied to the global economy than emerging markets like China and Brazil. As my colleagues Del Stafford and Daniel Morillo pointed out last fall in blog posts, this means frontier markets have exhibited a low […]
High Yield Bond Funds Witness Inflows for Second Consecutive Week
Investor flows in high yield bond funds were positive last week, making it the second successive week of inflows.
Carl Icahn’s Take on BlackRock and Other High-Yield Issuers
Carl Icahn has stated that “BlackRock is an extremely dangerous company,” as it doesn’t understand the risks of its actions.
Clearing up a common misconception about bond ETF management
A bond ETF is managed by a human (sometimes several). A common misconception about bond ETFs is that they simply hold all the securities in the index they track.
High Yield Still Has a Place in Most Portfolios
The three-month Volatility Index (or VIX), which measures the implied volatility of options on the S&P 500 stock market index, is approaching record lows.
Outflows Continue in High-Yield Bond Funds: Week to June 19
Last week, investor flows in high-yield bond funds remained in negative territory for the second week in a row. They’ve witnessed inflows of $2.6 billion YTD.
Where Should You Invest Given This Low Yield Environment?
While high yield bonds could be an avenue for higher yields, they seem risky given the slowing global economy and low oil prices. In such a scenario, preferred stocks could offer some value.
High Yield Offers Attractive Potential in a Yield-Starved World
In an environment of generally decent, albeit recently disappointing, growth and gently rising yields, high yield offers attractive potential in a yield-starved world.
Outflows Resume for High Yield Bond Funds
Investor flows in high yield bond funds returned to negative territory last week, after having seen inflows in the previous week.
Inflows Return to High Yield Bond Funds in the Week to June 5
Investor flows in high yield bond funds were in positive territory last week.
Must-know: Monetary policy outlook according to Dr. William Dudley
The Fed funds rate has remained near zero in the aftermath of the great recession.
Leveraged Loan Fund Outflows Reach Highest Level Yet in 2015
According to Lipper, leveraged loan funds saw outflows for the week ended August 19, making it the fourth such successive week. The quantum of outflows was $754 million, the highest so far in 2015.
Comparing ETNs with ETFs: The must-know pros of ETNs
ETNs are free of tracking errors, and investors can defer taxation until they mature or are sold.
Leveraged loan volume continues steady decline, refi cycle over?
While yields continue pushing lower, volume is starting to slow down, which may affect the performance of leveraged loans in coming months. Weekly loan volume is a valuable gauge of the activity in the leveraged loan market. The volume represents the new supply of loans to the secondary market. The existing supply is affected by […]
Structural Considerations Could Mean Lower Yields in the Future
Many structural considerations are likely to keep yields low in the future. Demand for Treasuries and bonds is likely to be more than the supply in the next two years.
Must-know: High yield fund flows regaining strength, time to dip back in?
After several weeks of record outflows, investors start regaining trust Fund flows gauge where most investors are moving their money. While following this indicator assumes momentum strategies work, in weeks of high inflows, there will be a delay between the time when funds come in and when managers can invest them in assets, so they […]
A guide to Yellen’s Delphic speech and the Odyssean FOMC guidance
In this article, we’ll discuss how the Fed’s Odyssean and Delphic guidance in March has impacted financial markets.
Why falling junk bond yields aren’t benefiting all issuers
Yields on high yield debt decreased by 24 basis points or 0.24% over the week ending October 24, to come in at 5.98%.
Weekly fund flows: High yield bonds and leverage loan ETFs
Investor sentiments favored the U.S. equity and high yield bond market The Vanguard Total Bond Market ETF (BND) has rallied almost 1.5% since the start of the year and was down by 11 bps last week. In line with that, the Power Shares Senior Loan Portfolio (BKLN) ETF, which mainly tracks the leveraged loans, reported […]
Recommendation: Keep municipal bonds in mind
While no longer cheap per se after their extraordinary run in 2014, municipal bonds continue to look attractive versus both Treasuries and corporate bonds.
Credit spreads: A fixed income investor’s must-know guide
Credit spreads are the difference in yield between U.S. Treasuries and corporate bonds of the same maturity. Corporate bonds yield more than Treasury bonds, as they carry a risk of default.
Overview: High-yield debt market borrowers set new 2014 records
Despite a holiday-shortened week, issuance volumes for leveraged loans surged by almost 49%, week-over-week, to $21.3 billion.
Why investors piled into junk bond funds
High market volatility usually increases risk perceptions for junk bonds (PHB). This increases spreads and yields. As a result, bond prices decrease.
High-Yield Bond Market Had a Strong Performance Last Week
High-yield bond issuance activity was strong last week. Dollar-denominated high-yield debt amounting to $10.1 billion was issued in the week ending April 22.
High yield bleeding slows, but is there anything left to drain out?
In just four weeks, the high yield bond flows amounted $9 billion in outflows. Fund flows are a good gauge of investor sentiment towards an asset class. Large outflows, such as the $900 billion one four weeks ago, should have been a good enough warning sign that something was going on, even if you were […]
Why You Should Favor Credit over Duration When it Comes to Bonds
Favor credit over duration as interest rates rise. Look for tactical opportunities within fixed income.
Why does the loan market see continued interest from investors?
Last week, the leveraged loan market (BKLN) had an inflow of $411 million compared to $600 million inflows in the previous week.
Must-know: Key return drivers for high-yield bond ETFs
High-yield or junk bonds are issued by borrowers that have a lower ability to service their debt obligations. They’re rated BB+ and below—according to Standard & Poor’s credit ratings system.
Why High Yield Bond Market Issuance Gained Traction Last Week
High yield bond issuance activity gained traction last week on improved Market sentiment. The total US dollar-denominated issuance of high yield debt is $60.8 billion in 2016 YTD.
September 23 Saw 9 Straight Weeks of Leveraged Loan Fund Outflows
Leveraged loans funds saw the ninth straight week of outflows for the week ended September 23. The outflows totaled $257.6 million, compared to net outflows of $350.4 million in the previous week.
When geopolitical risk takes precedence over interest rate risk
The total returns on municipal debt came in at 3.32% in the first quarter of 2014, as measured by the Barclays Municipal Bond Index.
Why Kocherlakota says price targeting beats inflation targeting
Along with the two suggestions mentioned in Part 6 of this series, Narayana Kocherlakota also dropped in two additional suggestions for improving the FOMC framework statement.
Leveraged Loan Funds: Ongoing Outflows in June
Last week’s quantum of outflows was $223 million. This brings the total net outflows from leveraged loan funds to $4.3 billion year-to-date.
How to Ballast Your Portfolio with Bonds
Municipal bonds (or munis) were the best performers in 2015 with returns of 3.2%. Meanwhile, investment-grade corporate bonds (LQD), long-dated Treasuries (TLT), and high-yield bonds (HYG) all gave negative returns in 2015.
Why are high yield volumes strong despite fund outflows? (Part 4)
Continued from Part 3 Leveraged loans remain resilient On leveraged loan land (BKLN), the high volatility of the bond markets (BND) doesn’t seem to exist. While high yield bond issuance (JNK) has been up and down depending on the weather, leveraged loans have remained relatively resilient over the past month. Steady volumes, aggressive issuance Volumes last […]
Why the decline in Treasury rates helped the leveraged loan market
Contrary to high yield bonds (HYG), leveraged loans posted a better-than-expected week.
Where Can You Find Relative Value within Fixed Income?
Where’s the relative value within fixed income? High yield bonds appear relatively attractive.
How Has Purchasing High-Yield Debt Helped AngloGold?
AngloGold’s net debt fell by 32% in 1H16 over 1H15, mostly due to the sale of its Cripple Creek & Victor mine to Newmont Mining for $820 million.
Pack your bags, the high yield party is over!
The high yield market had its largest ever weekly outflow Fund flows are strong indicators of investor confidence and offer insight into changing views within the investor community. Whether it is sharp reversals or steady flows, the weekly flows are important to understand the weight investors assign to different market events and changing conditions. Last […]
Why are high yield volumes strong despite fund outflows? (Part 6)
Continued from Part 5 Cause for concern? With the issuance volumes across the high yield bond market and the leveraged loan market, the market seems like it should be back on a healthy note. On the other hand, the strong outflows in the high yield market the previous week are a reason for concern. August […]
Why the bull run in stocks affected high-yield bond markets
When the economy is expanding, corporate revenues and profits increase. Corporate delinquencies usually fall and the high-yield debt issuers’ debt-coverage ratios improve.
Leveraged Loans Issuance Reaches Its Highest 2015 Level
The US leveraged loans market saw an allocation of ~$19.0 billion worth of senior loans across 22 transactions in the week to May 8.
Comparing leveraged loans and high yield bonds: Investor base
Both leveraged loans (BKLN) and high yield bonds (HYG) have a similar investor base, with the exception of banks in leveraged loans.
Why policymakers favor reducing MBS and Treasuries reinvestment
The Fed also embarked on three rounds of quantitative easing (or QE). Now, the Fed is looking to decrease the size of its bloated balance sheet.
Why the FOMC believes that credit conditions are still strong
Easier borrowing conditions stimulate business investment among firms. Higher investment would generate employment and benefit firms’ revenues and profits.
Exposure to junk bonds: How much should you hedge?
Junk bonds are high yield bonds issued by below–investment grade corporations. Due to the low ratings and high risk of default attached to these bonds, they’re popularly called “junk bonds.”
Why last week’s sharp dip in yields came as a surprise
And though the 10-year yield recovered somewhat Thursday as Treasury prices dropped, Wednesday’s dip below 2% came as a surprise.
The Intense Search for Yield Ends in the United States
You historically can’t get a high level of yield from relatively safe fixed income investments.
What goes up comes crashing down: Bonds in the doghouse (Part 2)
High yield bonds (JNK) are also in the doghouse High yield fund flows reversed significantly last week after two strong weeks leading up to the FOMC (Federal Open Market Committee) meeting. The question now is whether these outflows were temporary caution prior to the meeting, or if investors have packed up and left for sure. High yield (HYG) fund […]
Overview: High-yield bond markets since the Great Recession
High-yield, or junk-rated, bonds have higher yields than investment-grade bonds—like U.S. Treasuries and high-quality corporate debt. They’re issued by borrowers with higher credit risk—for example, with a lower ability to service the debt issued. Investors need a higher return to compensate for the higher risks involved.
The FOMC adopts new forward guidance that affects stocks and ETFs
The policy statement following the recent Federal Open Market Committee (or FOMC) meeting held on March 18–19 received diverse reactions from policy makers and the investment community.
Why Qorvo and HCA Issued Most Junk Bonds
Qorvo is a company involved in radio frequency systems and defense. It issued junk bonds worth $1.0 billion last week that were rated as Ba1/BB+.
Unemployment and discouraged workers: The improvement continues
This article considers the halfway mark improvement in the U-4 labor data and the implication for fixed income investors.
Why you can expect the upward-sloping yield curve to continue
Tight monetary policy doesn’t seem to be in the cards—at least in the near future. The yield curve should remain upward-sloping for some time.
Why leveraged buyout debt deals mark record first half in 2014
Leveraged loan (BKLN) mutual funds continued to see investors exit for the eighth consecutive week, with net outflows of $457 million last week.
Why high yield weekly issuance continues to favor suppliers
Last week ended on a similar mood as the previous week. Issuers continued to supply bonds to the hungry market. High yield issuance ended the week 26% higher than the previous week.
Why Fisher and Plosser disagreed with the FOMC policy motion
Richard Fisher believes that the Fed needs to tighten policy. This is based on the improved labor market and inflation outlook. He also believes that continued monetary accommodation is causing signs of “financial excess” in certain asset classes. He spoke earlier about signs of froth in high-yield bond (JNK) (HYG) markets.
Why are junk bond yields the lowest ever on record?
The BofA Merrill Lynch U.S. High Yield Master II Index increased by 0.34% over the week ending June 20, and is up by 5.64% so far this year (up to June 20).
Why Was High-Yield Bond Issuance Slow Last Week?
Last week brought the total US dollar-denominated issuance of high-yield debt to $66.5 billion in 2016 YTD—47.0% lower than the same period in 2015.
Break prices confirming weakness in the bond high yield market
The price at which bonds are breaking for trading in the secondary market shows a clear downtrend year to date. The price at which bonds are placed with initial investors is given by the original issue discount (OID) and sets the bond’s yield to maturity. The break price, on the other hand, refers to the […]
Jeffrey Gundlach: The Junk Bond Market Needs Higher Oil Prices
Jeffrey Gundlach also warned about the high-yield market (HYG) (JNK). He said the “clock is running out” for energy companies (IEZ) due to low oil (USO) prices.
Must-know: Working the municipal bond portfolio
Flex more muni muscle with a flexible municipal fund. “Unconstrained” investing has gotten quite a bit of press this year.
Analyzing secondary market trends in leveraged loans
Collateralized Loan Obligation (or CLO) deals continued to thrive. Four CLO deals totaling $2 billion came through in the week ending November 7.
Why investors are turning to corporate bond ETFs
Investors seeking exposure to investment grade or high yield corporate debt have increasingly been using fixed income ETFs.
After the Fallout from Brexit, the Fed’s Hands Are Tied Again
With the Brexit fallout, the Federal Reserve will most likely delay the next interest rate hike until the end of this year or even next year.
Why does the Fed matter? Because its policies move the market
With monetary policy a huge driver of investment performance, all investors need to be fluent in “Fedspeak.”
Will Japan Benefit from Monetary Easing with Yield Curve Control?
In September, gold (GDXJ) prices rose sharply against all major currencies except the yen.
Where Are Oil Prices Heading?
Oil prices are expected to be lower for longer. This is bad news for high yield bond funds (HYG) (JNK) in the United States.
High yield issuance continues to increase, spike likely unsustainable
The large high yield bond issuance was the second largest over the past two months and the highest in number of issuances Weekly issuance can help gauge both the demand and supply of the high yield bond market. New bonds increase the supply available to investors in the secondary market and the demand given indicates […]
Why leveraged loan volume is losing steam: Can prices hold?
Last week was dismal in terms of volume for both bonds and loans given the short week and anticipation of a Fed minutes release Weekly volumes are good indicators of market strength. The high yield bond market volumes have fallen significantly since May due to the speculation of the earlier-than-expected tapering of quantitative easing. Fed […]
Bear strategy: Profit from rising rates with fixed income ETFs
Investors could consider hedging their short-term duration risk (HYG: 3.98 years, JNK: 4.20 years) with a short position in longer-dated bonds.
Why is Puerto Rico in hot water over its debt obligations?
Puerto Rico’s labor force participation rate was about 40% in April, 2014.
Assessing high yield bonds as part of your fixed income portfolio
The decadent offering of barbecued ribs at a weekend party is similar to that of high yield fixed income investments. By taking on greater risk of spilling sauce on your shirt you have the experience of a true summertime staple…
What Does the Flattening Yield Curve Indicate for Investors?
Bond markets are experiencing rising yields due to higher economic growth expectations. However, the 10-Year Treasury yield was still low at 2.4% on March 29, 2017
Hedging: You can profit from rising rates with fixed income ETFs
Should interest rates rise equally in the five-year part of the yield curve as the 20-year part of the yield curve, HYG and JNK would likely decline roughly 3.98% and 4.20% in value.
Why scheduling the rate hike is a balancing act
Since 2008, the Fed’s monetary policy has been extremely accommodative. However, as the recovery progresses, there are increasing calls for policy normalization.
Why did investors give US debt markets the thumbs down?
Volatility, or the index commonly known as the “fear factor,” surged over 34% to 17.03 in the week ending August 1—this was the highest level in almost four months.
Why Kocherlakota concludes that the FOMC is underperforming
Even among those who have jobs, the fraction of people working part-time but who would like to work more hours is higher than the historical average.
Why dividend recapitalization is the sweet spot for leveraged loans
While M&A activity was still below market prospects, demand for dividend recapitalization deals was mostly strong last week.
Why leveraged loans have followed high yield bonds (Part 1)
If high duration drove the bond sell-off, why did loans follow suit? High yield bonds and leveraged loans are the two main asset classes composing the sub-investment grade called “fixed-income debt capital markets.” High yield bonds are defined as bonds rated below BBB-, and leveraged loans are those paying over L+125 basis points or rated […]
Analyzing Secondary Market Trends in Leveraged Loans
According to data from Lipper, leveraged loan mutual funds continued to see outflows in the week ending April 3. The total outflow was $445 million.