What To Make of Floating Rate Funds May 2014
|
|
- Maria Lamb
- 8 years ago
- Views:
Transcription
1 What To Make of Floating Rate Funds May 2014 David Hillmeyer of Delaware Investments explains the risks and potential rewards of floating-rate debt in the current environment The current low-rate environment is plaguing fixed-income investors as they search for yield amid the fear of rising rates. And bank-loan funds have become a huge benefactor. Net flows into the category exceeded all others in March, and over the past year more than $60 billion in new assets has poured in, according to Morningstar. While such products provide a hedge in the event of an interest-rate increase, they also carry more credit risk than many consider. Given the likelihood of market volatility, says David Hillmeyer, lead portfolio manager for Delaware Investments Diversified Floating Rate Fund, it s best to err on the side of caution. If the primary objective is to hedge against the downside of rising rates, do you want to own a portfolio composed of nearly all below-investment grade credit risk? he asks. Hillmeyer s investment strategy imposes a limit of no more than 50% below-investment grade and, as a result, currently carries an average investment-grade rating (as measured by Moody s and Standard & Poor s). Our approach provides us with the flexibility to allocate away from asset classes where the risk/reward [balance] is no longer attractive with the goal of preserving principal during periods of heightened volatility, he explains. A single-asset-class strategy, such as [investing only in] bank loan funds, doesn t have that luxury. Hillmeyer recently spoke with Tara Kalwarski of Morgan Stanley Wealth Management about challenges in the current market environment and where he s finding attractive investment opportunities. The following is an edited version of their conversation. Tara Kalwarski: Can you explain how the current positioning of Delaware s Diversified Floating Rate Fund is reflective of your broader macro views? David Hillmeyer: The natural go-to asset class in a risingrate environment for fixed-income investors has been the bank-loan market; today is no exception. Retail loan funds recently experienced 95 consecutive weeks of inflows [according to S&P s LCD News as of April 21, 2014]. It is important, however, that investors understand the risks of investing in a single-asset-class strategy such as loan funds. We attempt to address some of these risks in Delaware s Diversified Floating Rate Fund, which [employs] a diversified approach that provides an added layer of flexibility when managing a changing risk landscape. The portfolio s prospectus limits the Fund to no more than 50% below-investment grade. The fact that the Fund is bound by this quality constraint results in the inability to mirror the credit risk embedded in bank-loan funds. The average credit quality of the portfolio is firmly investment grade, with just over 30% exposure to the loan asset class. As you can see, we are at the midpoint in terms of our risk profile. In our opinion, market pricing for all assets that are down in quality doesn t reflect an attractive breakeven relative to security types such as investment-grade corporate credit, particularly when the primary objective is minimizing interest-rate volatility. The diversified nature of [our] strategy [helps to] provide us with the tools to address these changing market conditions and allows us to be selective and
2 opportunistic in our approach. High-grade credit makes up the majority of the portfolio with just over 50% of it in fixed or floating investment-grade corporate bonds. We utilize interest-rate swaps as a risk-management tool to hedge the interest-rate risk associated with fixed-rate bonds. This allows us to provide additional diversification and maintain a duration of approximately a quarter of a year, with the goal of limiting price volatility due to changing rates. The exposure to bank loans and high-grade corporate credit is close to 90% of the total portfolio. Additionally, the portfolio has exposure to a few select asset classes that are more opportunistic in nature, including municipal bonds, convertibles and AAA-rated asset-backed floating-rate securities. The liquidity that higher-quality assets generally provide allows flexibility to manage the risk during periods of heightened volatility. Kalwarski: How has the ratio between those different types of securities varied in different economic climates? Hillmeyer: This particular strategy was founded in the first quarter of 2010, and although it hasn't been through a significant economic slowdown, it has been managed through periods of heightened volatility. Examples include the European crisis and the downgrade of sovereign U.S. [debt securities]. During these periods it wasn t uncommon to see our loan allocation [go] lower by 10% and [for us to mount] a concerted effort to reduce risk further by shortening maturities in the more liquid sectors such as investment-grade corporates. We also moved the portfolio to a more defensive [positioning] by increasing the holdings of asset-backed securities. Absent pockets of volatility, there haven t been major catalysts that required us to make significant adjustments to the holding. Relatively stable fundamentals and easy monetary policies were supportive of credit. Kalwarski: What indicators might compel you to reposition the portfolio? Hillmeyer: We have to continue to be very cognizant of the Federal Reserve s monetary policy and the market s response to a changing liquidity environment as the central bank adjusts policies to address the growth trajectory of the economy. How the market reacts to these changes is one of the most important questions investors will face in 2014, because the ripple effects of the Fed s actions will likely be pronounced. We observed during the late spring and early summer of 2013 how monetary policy s tentacles are far reaching, as bond yields in emerging markets spiked meaningfully higher while currencies [of these economies] came under selling pressure. This created a situation where the central banks of these countries had to make difficult decisions, such as the need to raise rates in order to defend their currencies when growth was already slowing. The significant injection of liquidity into the system by the Federal Reserve left emerging markets in a very difficult predicament. During this period, certain markets experienced significant capital inflows that are now at risk of being pulled as the Fed slowed the pace of purchases of securities. Kalwarski: You mentioned some strategies that you employ to mitigate risk or dampen volatility. Can you describe these in more detail? Hillmeyer: At times, we will use derivatives to hedge credit risk. It is important to note, however, that we can't use leverage in our strategy. But derivatives are a material part of our risk-management. For instance, in 2011 when markets were under selling pressure, we utilized hedges in an attempt to mitigate some of the price volatility in the portfolio. Interest-rate swaps represent the largest use of derivatives in the strategy by [helping to] provide us with the flexibility to purchase fixed-rate bonds for diversification purposes and total-return opportunities. If we want to have the versatility to move out of bank loans which are naturally floating-rate instruments and into an asset class that's higher in credit quality, like the investment-grade market, problems would exist if [we] were to just try to source floating-rate product in the investment-grade corporate market. For instance, the majority of the Barclays U.S. Floating Rate Index is composed of financials. We do not want to swap credit risk in the loan market only to take on specific sectorconcentration risks. Therefore, being able to use interest-rate swaps and buy fixed-rate bonds allows us to [potentially] take advantage of the entire fixed-income market. Kalwarski: What are you are seeing in the bank-loan market today? Hillmeyer: A lot of people have talked about the risk associated with so much money coming into the loan market. It has driven the bank-loan market to prices that are at or near par. This creates a dilemma for portfolio managers that are limited by their prospectuses to purchasing primarily bank loans because it can be challenging to source enough product, not to mention at levels that represent value. 2
3 This asset class is generally callable at any time. So if a loan manager buys a loan at a premium, that manager could essentially have this investment get called away at any time. Furthermore, if this loan was purchased at a premium, the investor would realize a loss on principal. We remain comfortable with the fundamentals, but the absolute level of pricing in the loan market isn't as attractive as it was the past year due to this call feature. Given this dynamic, we would rather look for opportunities that would include moving up in quality and identifying investment choices that won t experience the same limited total-return opportunity due to structure. For example, the risk/reward profile may be [made] more attractive by investing in a 10-year, fixed-rate, investment-grade corporate bond that our research team has identified as an improving credit story. In the event our credit call is correct and the risk premium of the investment compresses, the potential benefit accrues directly to the shareholders rather than back to the issuer when the security is called. Remember, a significant majority of the investment-grade corporate market isn t callable. This is in stark contrast to what we observe in the loan market. Kalwarski: What is the most challenging aspect about the current environment? Hillmeyer: People who are invested in fixed income are concerned about rising rates. When I ask them, "Why do you want to own a floating-rate product and in particular a bankloan fund? Nine times out of 10, they'll tell me it's because they're worried about rising rates, not because they are concerned about rates and believe there is value in the loan market. Generally two primary risks of a bond portfolio are credit risk and interest-rate risk. Buying a loan portfolio addresses the interest-rate risk, but it doesn't address the credit risk. That's another conversation that investors need to have. The reason it is so important is because there is very little yield coming from fixed income. Risk premiums would not have to change by much before many asset classes would experience negative price returns. Kalwarski: How might the market respond to increased defaults? Hillmeyer: In the past, when you start to see defaults increase as liquidity and access to capital markets become impaired, recovery values decrease too. Historically, recovery values are [among] the important things that differentiated the loan market from the high-yield market. The loan market is a secured market, while the high-yield market in most instances is unsecured. As a result, recovery values in the high-yield market are typically [lower] than those experienced on first-lien loans. The change in the size of the loan market over the past 10 years, combined with a higher degree of daily valued assets, may result in a change in the volatility experienced by the asset class as investors exit the loan market. Delaware s diversified approach to managing interest-rate risk will provide multiple sources of potential liquidity away from the loan market. Additionally, the limit of no more than 50% [allocation] to below-investment-grade assets should help temper portfolio volatility during an increase in defaults. Kalwarski: How and where does a diversified loan product fit into a broadly diversified fixed-income bucket? Hillmeyer: It's very dependent upon the individual. [I believe] the best way to think about floating-rate funds now in a fixed- income portfolio is as a tool to reduce price volatility due to rising rates in an investment environment where low absolute rates [help] provide an interesting entry point. When you evaluate yields on fixed-income assets today, a significant portion of the yield is the result of credit risk, not rates. Whether investors choose bank loans or a diversified strategy like ours, it s an opportunity to add an interest-rate hedge to their fixed-income portfolios. Kalwarski: What is your interest-rate outlook? Hillmeyer: At this stage, it continues to be our belief that a 3%-to-3.5% 10-year Treasury rate is enough to provide somewhat of an anchor on growth. With that said, however, a rebound in growth during the second quarter could easily make investors question if the Federal Reserve is behind the curve as it pertains to its interest-rate policies. If this occurs, we should anticipate more interest-rate volatility. This would most likely lead to a continuation of the bear flattener that has been observed over the course of the past several months. Kalwarski: What concerns are you hearing from investors? Hillmeyer: [In] just about every conversation that I have, there is real concern about rising rates. Right now it appears as though the economy is continuing to point toward growth, [and that] would lead to higher rates. However, as a risk manager, [I think] it is important to evaluate the contrarian view that we actually won t see the rate increase that is widely expected. Although this isn t our base-case assumption, it is a possibility that should not be ignored. 3
4 Furthermore, the position surveys we observe indicate that investors are very short the rates market, which could make it more difficult to exit the current trading range. Another concern being raised by investors pertains to the need for income. Income is incredibly important, particularly when interest rates are near historic lows. One source of income that investors have pursued is investing in the loan market. It is important to ensure that people understand that most of the bank loans in the market now carry a Libor floor, which averages approximately 0.85%. What this means is that Libor must move to a level above the stated floor on the loan before the coupon will begin to reset higher and the investor actually realizes additional income. I find that many investors don t understand this fully and instead believe the coupon stream coming off their investments will reset immediately. This just isn t the case. Kalwarski: Looking at the past 12 months, do you recall anything that surprised you? Hillmeyer: Quite frankly, I underestimated the influence of all the liquidity that has been created the past several years on valuations. It appears that market participants used this as the foundation of their investment thesis. It was my expectation that negative consequences would cause a correction that has yet to materialize. However, this experiment of quantitative easing has further to run, and markets could be still be surprised by just how choppy the landing could be. *Unless otherwise noted, the source for all information is Delaware Investments as of April
5 Investors should carefully consider the investment objectives and risks as well as charges and expenses of a mutual fund before investing. To obtain a prospectus, contact your Financial Advisor or visit the fund company s website. The prospectus contains this and other information about the mutual fund. Read the prospectus carefully before investing. Bonds are affected by a number of risks, including fluctuations in interest rates, credit risk and prepayment risk. In general, as prevailing interest rates rise, fixed income securities prices will fall. Bonds face credit risk if a decline in an issuer's credit rating, or creditworthiness, causes a bond's price to decline. Finally, bonds can be subject to prepayment risk. When interest rates fall, an issuer may choose to borrow money at a lower interest rate, while paying off its previously issued bonds. As a consequence, underlying bonds will lose the interest payments from the investment and will be forced to reinvest in a market where prevailing interest rates are lower than when the initial investment was made. Diversification does not assure a profit or protect against loss in declining financial markets. High yield bonds are subject to additional risks such as increased risk of default and greater volatility because of the lower credit quality of the issues. Senior loans are generally rated below investment-grade by rating agencies, and entail greater credit risk than higher quality, investmentgrade securities such as U.S. Treasuries. In the event a borrower stops paying interest or principal on a loan, the collateral used to secure the loan may not be entirely sufficient to satisfy the borrower's obligations and, in some cases, may be difficult to liquidate on a timely basis. While senior loans offer higher interest income when interest rates rise, they also will generate less income when interest rates decline. Exposure to this type of investment is available at Morgan Stanley Wealth Management for appropriate clients via floating rate funds only. Many floating rate securities specify rate minimums (floors) and maximums (caps). Floaters are not protected against interest rate risk. In a declining interest rate environment, floaters will not appreciate as much as fixed rate bonds. A decline in the applicable benchmark rate will result in a lower interest payment, negatively affecting the regular income stream from the floater. The general meaning of Standard & Poor s credit rating opinions for AAA is: Extremely strong capacity to meet financial commitments. Highest Rating. Derivatives used by the fund can be illiquid, may disproportionately increase losses and may have a potentially large negative impact on the fund s performance. International investing entails greater risk, as well as greater potential rewards compared to U.S. investing. These risks include political and economic uncertainties of foreign countries as well as the risk of currency fluctuations. These risks are magnified in countries with emerging markets, since these countries may have relatively unstable governments and less established markets and economics. The views and opinions expressed herein do not necessarily reflect those of Morgan Stanley. The information and figures contained herein has been obtained from sources outside of Morgan Stanley and Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of information or data from sources outside of Morgan Stanley. Morgan Stanley is not responsible for the information, data contained in this document. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results. The material has been prepared for informational or illustrative purposes only and is not an offer or recommendation to buy, hold or sell or a solicitation of any offer to buy or sell any security, sector or other financial instrument, or to participate in any trading strategy. It has been prepared without regard to the individual financial circumstances and objectives of individual investors. Any securities discussed in this report may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. There is no guarantee that the security transactions or holdings discussed will be profitable. This material is not a product of Morgan Stanley & Co. LLC s Research Department or a research report, but it may refer to material from a research analyst or a research report. The material may also refer to the opinions of independent third party sources who are neither employees nor affiliated with Morgan Stanley. Opinions expressed by a third party source are solely his/her own and do not necessarily reflect those of Morgan Stanley. Furthermore, this material contains forward-looking statements and there can be no guarantee that they will come to pass. They are current as of the date of content and are subject to change without notice. Any historical data discussed represents past performance and does not guarantee comparable future results. Indices are unmanaged and not available for direct investment Investments and services offered through Morgan Stanley Smith Barney LLC. Member SIPC CRC /2014 5
Preparing Your Fixed Income Portfolio for Rising Interest Rates
fixed income portfolio august 2013 2 Bond Fundamentals 3 Products to Hedge Interest Rates 4 Strategies to Mitigate the Effect of Rising Rates 6 Investment Considerations Preparing Your Fixed Income Portfolio
More informationWith interest rates at historically low levels, and the U.S. economy showing continued strength,
Managing Interest Rate Risk in Your Bond Holdings THE RIGHT STRATEGY MAY HELP FIXED INCOME PORTFOLIOS DURING PERIODS OF RISING INTEREST RATES. With interest rates at historically low levels, and the U.S.
More informationMunis: Still Delivering in Tough Conditions? July 2014
Munis: Still Delivering in Tough Conditions? July 2014 Columbia Management s James Dearborn finds plenty of opportunity in munis today Over the past year, James Dearborn says, a challenging part of his
More informationImpact of rising interest rates on preferred securities
Impact of rising interest rates on preferred securities This report looks at the risks preferred investors may face in a rising-interest-rate environment. We are currently in a period of historically low
More informationCALVERT UNCONSTRAINED BOND FUND A More Expansive Approach to Fixed-Income Investing
CALVERT UNCONSTRAINED BOND FUND A More Expansive Approach to Fixed-Income Investing A Challenging Environment for Investors MOVING BEYOND TRADITIONAL FIXED-INCOME INVESTING ALONE For many advisors and
More informationPROFESSIONAL FIXED-INCOME MANAGEMENT
MARCH 2014 PROFESSIONAL FIXED-INCOME MANAGEMENT A Strategy for Changing Markets EXECUTIVE SUMMARY The bond market has evolved in the past 30 years and become increasingly complex and volatile. Many investors
More informationSenior Floating Rate Loans
Senior floating rate loans have become a staple of the U.S. debt market and have grown from a market value of $126 billion in 2001 to $607 billion as of year-end 2011. 1 For over 20 years, managed senior
More informationA GUIDE TO FLOATING RATE BANK LOANS:
Contact information: Advisor Services: (631) 629-4908 E-mail: info@catalystmf.com Website: www.catalystmf.com A GUIDE TO FLOATING RATE BANK LOANS: An Attractive Investment for a Rising Interest Rate Environment
More informationFixed-income opportunity: Short duration high yield
March 2014 Insights from: An income solution for a low or rising interest-rate environment Generating income is a key objective for many investors, and one that is increasingly difficult to achieve in
More informationWhy Consider Bank Loan Investing?
Why Consider Bank Loan Investing? September 2012 Bank loans continue to increase in popularity among a variety of investors in search of higher yield potential than other types of bonds, with lower relative
More informationWhy high-yield municipal bonds may be attractive in today s market environment
Spread Why high-yield municipal bonds may be attractive in today s market environment February 2014 High-yield municipal bonds may be attractive given their: Historically wide spreads Attractive prices
More informationFIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK
1 FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK By Michael McMurray, CFA Senior Consultant As all investors are aware, fixed income yields and overall returns generally have been
More informationAn Alternative Way to Diversify an Income Strategy
Senior Secured Loans An Alternative Way to Diversify an Income Strategy Alternative Thinking Series There is no shortage of uncertainty and risk facing today s investor. From high unemployment and depressed
More informationNPH Fixed Income Research Update. Bob Downing, CFA. NPH Senior Investment & Due Diligence Analyst
White Paper: NPH Fixed Income Research Update Authored By: Bob Downing, CFA NPH Senior Investment & Due Diligence Analyst National Planning Holdings, Inc. Due Diligence Department National Planning Holdings,
More informationBond Fund of the TIAA-CREF Life Funds
Summary Prospectus MAY 1, 2015 Bond Fund of the TIAA-CREF Life Funds Ticker: TLBDX Before you invest, you may want to review the Fund s prospectus, which contains more information about the Fund and its
More informationRising Rates and the Case for Leveraged Loans PERSPECTIVE FROM FRANKLIN FLOATING RATE DEBT GROUP
January 11, 2013 Topic Paper September 2015 Rising Rates and the Case for Leveraged Loans PERSPECTIVE FROM FRANKLIN FLOATING RATE DEBT GROUP Mark Boyadjian and Reema Agarwal of Franklin Templeton Fixed
More informationINCOME IN ALL MARKETS COLUMBIA STRATEGIC INCOME FUND Class A COSIX Class C CLSCX Class R CSNRX Class R4 CMNRX Class R5 CTIVX Class Z LSIZX
INCOME IN ALL MARKETS COLUMBIA STRATEGIC INCOME FUND Class A COSIX Class C CLSCX Class R CSNRX Class R4 CMNRX Class R5 CTIVX Class Z LSIZX NAVIGATING A CHANGING INTEREST RATE ENVIRONMENT Rise to the challenge
More informationSeix Total Return Bond Fund
Summary Prospectus Seix Total Return Bond Fund AUGUST 1, 2015 (AS REVISED FEBRUARY 1, 2016) Class / Ticker Symbol A / CBPSX R / SCBLX I / SAMFX IS / SAMZX Before you invest, you may want to review the
More informationFLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS. Why does the bank loan sector remain so attractive?
FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS Bank loans present a compelling income opportunity and a portfolio diversifier that provides protection against traditional
More informationA strategic, multisector approach to fixed-income investing
Alternative Solutions Forward Credit Analysis Long/Short Fund A strategic, multisector approach to fixed-income investing Is it time to adapt your fixed-income approach? Today s fixed-income investors
More informationFLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS
FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS With about $713 billion in assets, the bank loan market is roughly half the size of the high yield market. However, demand
More informationSankaty Advisors, LLC
Leveraged Loans: A Primer December 2012 In today s market environment of low rates and slow growth, we believe that leveraged loans offer a unique diversification option for fixed income portfolios due
More informationBond Snapshot with Kathy Jones The Year of the Taper
Bond Snapshot with Kathy Jones The Year of the Taper Kathy Jones, Vice President Fixed Income Strategist Schwab Center for Financial Research February 2014 Overview of Topics Tapering Implications Where
More informationRethinking Fixed Income:
Rethinking Fixed Income: The Importance of Income and Flexibility January 2011 Executive Summary Over the past 30 years, fixed-income investors have benefited from one of the largest secular trends in
More informationThe Search for Yield Continues: A Re-introduction to Bank Loans
INSIGHTS The Search for Yield Continues: A Re-introduction to Bank Loans 203.621.1700 2013, Rocaton Investment Advisors, LLC Executive Summary With the Federal Reserve pledging to stick to its zero interest-rate
More informationIn Search of Yield. Actively Managed High Yield Bond Funds May Offer Long-Term Value
In Search of Yield Actively Managed High Yield Bond Funds May Offer Long-Term Value In Search of Yield The Case for Actively Managed High Yield Bond Funds CONTENTS 2 Losing Ground to Inflation: The Impact
More informationPioneer Multi-Asset Ultrashort Income Fund
Pioneer Multi-Asset Ultrashort Income Fund A diversified, investment grade-focused approach to floating rate investing MAFRX INVESTOR GUIDE Pioneer Multi- Asset Ultrashort Income Fund* Share Class A C
More informationWhy Anfield s Universal Fixed Income Fund?
Why Anfield s Universal Fixed Income Fund? Disclosure Investors should carefully consider the investment objectives, risks, charges and expenses of the Anfield Universal Fixed Income Fund. This and other
More informationAn Alternative to Fixed Rate Bonds
An Alternative to Fixed Rate Bonds Voya Senior Loans Suite offered by Aston Hill Financial Seeks to pay high income in various rate environments One of the world s largest dedicated senior loan teams Five
More informationTaxable Fixed Income. Invesco Floating Rate Fund (AFRAX)
Taxable Fixed Income Invesco Floating Rate Fund (AFRAX) Senior Secured Loans A unique asset class Floating rate funds, also called senior loan funds, invest in senior secured loans. The loans have very
More informationLeveraged Loan Funds: Debunking the Myths
Leveraged Loan Funds: Debunking the Myths SM Leveraged Loan Funds: Debunking the Myths Contents 2 Myth #1: Managing liquidity in actively managed leveraged loan mutual funds is difficult. 3 Myth #2: In
More informationInvesting for rising interest rates
Strategies for fixed-income investors Investing for rising interest rates Rising interest rates can have a significant negative effect on the value of fixed-income investments because interest rates and
More informationImportant Information about Closed-End Funds and Unit Investment Trusts
Robert W. Baird & Co. Incorporated Important Information about Closed-End Funds and Unit Investment Trusts Baird has prepared this document to help you understand the characteristics and risks associated
More informationProspectus Baird Funds
Prospectus Baird Funds May 1, 2014 Baird Ultra Short Bond Fund (Institutional Class: BUBIX) (Investor Class: BUBSX) Baird Short-Term Bond Fund (Institutional Class: BSBIX) (Investor Class: BSBSX) Baird
More informationPIONEER ADVISORY: Pioneer Absolute Return Credit Fund Name Change
May 2013 PIONEER ADVISORY: Pioneer Absolute Return Credit Fund Name Change Effective June 17, 2013, the Fund s name will change to Pioneer Dynamic Credit Fund. It should be noted that the Fund s portfolio
More informationDeutsche Floating Rate Fund
Taxable Fixed-Income 2 nd quarter 2014 Deutsche Floating Rate Fund Access a world of opportunities through the global resources of Deutsche Bank Canada United States Netherlands Belgium United Kingdom
More informationFloating-Rate Securities
Floating-Rate Securities A floating-rate security, or floater, is a debt security whose coupon rate is reset at designated dates and is based on the value of a designated reference rate. - Handbook of
More informationThe timeless (and timely) case for high-yield bonds
INCOME EATON VANCE Looking beyond traditional sources of yield MARCH 2016 TIMELY THINKING The timeless (and timely) case for high-yield bonds SUMMARY High-yield bonds occupy a special capital market niche:
More informationBOND ALERT. What Investors Should Know. July 2013 WWW.LONGVIEWCPTL.COM 2 MILL ROAD, SUITE 105
BOND ALERT July 2013 What Investors Should Know This special report will help you understand the current environment for bonds and discuss how that environment may change with rising interest rates. We
More informationSHARES NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE. BKLN PowerShares Senior Loan Portfolio
SHARES NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE PowerShares Senior Loan Portfolio PowerShares Senior Loan Portfolio is the first senior loan exchange-traded fund (ETF) and seeks investment results
More informationPioneer Bond Fund. Performance Analysis & Commentary September 2015. Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments.
Pioneer Bond Fund COMMENTARY Performance Analysis & Commentary September 2015 Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments.com Third Quarter Review Pioneer Bond Fund s Class
More informationSUMMARY PROSPECTUS. TCW High Yield Bond Fund FEBRUARY 29 I SHARE: TGHYX N SHARE: TGHNX
TCW High Yield Bond Fund I SHARE: TGHYX N SHARE: TGHNX 20 6 FEBRUARY 29 SUMMARY PROSPECTUS Before you invest, you may want to review the Fund s Prospectus which contain more information about the Fund
More informationA Guide to Investing in Floating-rate Securities
A Guide to Investing in Floating-rate Securities What to know before you buy Are floating rate bonds suitable for you? The features, risks and characteristics of floating rate bonds are different from
More informationUnderstanding Fixed Income
Understanding Fixed Income 2014 AMP Capital Investors Limited ABN 59 001 777 591 AFSL 232497 Understanding Fixed Income About fixed income at AMP Capital Our global presence helps us deliver outstanding
More informationGlobal high yield: We believe it s still offering value December 2013
Global high yield: We believe it s still offering value December 2013 02 of 08 Global high yield: we believe it s still offering value Patrick Maldari, CFA Senior Portfolio Manager North American Fixed
More informationLord Abbett High Yield Fund
SUMMARY PROSPECTUS Lord Abbett High Yield Fund APRIL 1, 2015 CLASS/TICKER CLASS A... LHYAX CLASS I... LAHYX CLASS R4... TBD CLASS B... LHYBX CLASS P... LHYPX CLASS R5... TBD CLASS C... LHYCX CLASS R2...
More information9/30/81: 15.84% Real yield average: 2.46% Real 10-year Treasury yield 12/31/15: 0.25% -5% 58 63 68 73 78 83 88 93 98 03 08 13
NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE INVESTMENT INSIGHTS Building better fixed income portfolios 1Q 2016 PLEASE VISIT jpmorganfunds.com for access to all of our Insights publications. Get
More informationAn actively managed approach for today s fixed-income markets
Q3 2015 Putnam multi-sector fixed-income funds An actively managed approach for today s fixed-income markets D. William Kohli Michael V. Salm Paul D. Scanlon, CFA Putnam s three Co-Heads of Fixed each
More informationInsurance Dedicated Funds: Variable Insurance Trusts
At a Glance September 2015 Insurance Dedicated Funds: Variable Insurance Trusts Our goal at GSAM is to meet the financial goals of investors worldwide, now and in the future, with innovative investment
More informationEmerging Markets Bond Fund Emerging Markets Corporate Bond Fund Emerging Markets Local Currency Bond Fund International Bond Fund
PROSPECTUS PREMX TRECX PRELX RPIBX T. Rowe Price Emerging Markets Bond Fund Emerging Markets Corporate Bond Fund Emerging Markets Local Currency Bond Fund International Bond Fund May 1, 2016 A choice of
More informationFloating Rate Loans: An Attractive Yield Opportunity
Floating Rate Loans: An Attractive Yield Opportunity Joseph Lynch portfolio manager Bank Loan Management Bond yields remain at record lows and the Fed continues to espouse policy to keep interest rates
More informationBrown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale)
Summary Prospectus October 30, 2015 Brown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale) Before you invest, you may want to review the Fund s Prospectus, which
More informationBond Fund Investing in a Rising Rate Environment
MUTUAL FUND RESEARCH Danette Szakaly Ext. 71937 Date Issued: 1/14/11 Fund Investing in a Rising Rate Environment The recent rise in U.S. Treasury bond yields has some investors wondering how to manage
More informationJohn Hancock Bond Trust. John Hancock Focused High Yield Fund (the fund )
John Hancock Bond Trust John Hancock Focused High Yield Fund (the fund ) Supplement dated June 24, 2016 to the current Summary Prospectus, as may be supplemented The following information supplements and
More informationOpportunities in credit higher quality high-yield bonds
Highlights > > Default rates below the long-term average > > Valuations wide of historical average in BB and B rated credit > > Despite sluggish economy, high yield can still perform well > > High yield
More informationEvolving your fixed income strategy
Evolving your fixed income strategy 3Q 2015 INVESTMENT INSIGHTS NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE PLEASE VISIT jpmorganfunds.com for access to all of our Insights publications. Opportunities
More informationPriority Senior Secured Income Fund, Inc.
Priority Senior Secured Income Fund, Inc. This material is neither an offer to sell nor the solicitation of an offer to buy any security. Such an offer can be made only by prospectus, which has been filed
More informationIntroduction to Convertible Debentures
Introduction to Convertible Debentures Intro to Convertible Debentures March, 2009 Convertible debentures are hybrid securities which offer advantages of both bonds and equities. Like ordinary bonds they
More informationALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015
ALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015 Investment Adviser: RidgeWorth Investments A Shares C Shares I Shares Aggressive Growth Allocation Strategy SLAAX CLVLX CVMGX Conservative
More informationBlackRock Diversified Income Portfolio. A portfolio from Fidelity Investments designed to seek income while managing risk
BlackRock Diversified Income Portfolio A portfolio from Fidelity Investments designed to seek income while managing risk Fidelity Investments has formed a strategic alliance with BlackRock Investment Management,
More informationLord Abbett High Yield Municipal Bond Fund
SUMMARY PROSPECTUS Lord Abbett High Yield Municipal Bond Fund FEBRUARY 1, 2016 CLASS/TICKER CLASS A... HYMAX CLASS C... HYMCX CLASS I... HYMIX CLASS B... HYMBX CLASS F... HYMFX CLASS P... HYMPX Before
More informationCity National Rochdale Intermediate Fixed Income Fund a series of City National Rochdale Funds
City National Rochdale Intermediate Fixed Income Fund a series of City National Rochdale Funds SUMMARY PROSPECTUS DATED JANUARY 31, 2015, AS SUPPLEMENTED MAY 1, 2015 Class: Class N Institutional Class
More informationHolding the middle ground with convertible securities
January 2015» White paper Holding the middle ground with convertible securities Eric N. Harthun, CFA Portfolio Manager Robert L. Salvin Portfolio Manager Key takeaways Convertible securities are an often-overlooked
More informationIs it time to hire a professional to manage your bonds?
Is it time to hire a professional to manage your bonds? Today s bond markets are more complex Finding the right bonds can be difficult. The bond markets are large and complex, and it takes a lot of homework
More informationInvestor Blind Spots in Short-Duration Bond Funds
leadership series INVESTMENT INSIGHTS October 213 Investor Blind Spots in Short-Duration Bond Funds Extraordinary central bank intervention that followed the financial crisis produced a prolonged environment
More informationLeader Short-Term Bond Fund. Leader Total Return Fund
Leader Short-Term Bond Fund Institutional Shares: Investor Shares: Class A Shares: Class C Shares: LCCIX LCCMX LCAMX LCMCX Leader Total Return Fund Institutional Shares: Investor Shares: Class A Shares:
More informationThe Bright Start College Savings Program Direct-Sold Plan. Supplement dated January 30, 2015 to Program Disclosure Statement dated November 12, 2012
The Bright Start College Savings Program Direct-Sold Plan Supplement dated January 30, 2015 to Program Disclosure Statement dated November 12, 2012 This supplement amends the Program Disclosure Statement
More informationFIXED INCOME STRATEGIES FOR A RISING INTEREST RATE ENVIRONMENT
FIXED INCOME STRATEGIES FOR A RISING INTEREST RATE ENVIRONMENT John Donovan, Head of Fixed Income and Trading As the Federal Reserve and other central banks wind down their fiscal stimulus programs, we
More informationFederated New York Municipal Income Fund
Summary Prospectus October 31, 2015 Share Class A B Ticker NYIFX NYIBX Federated New York Municipal Income Fund A Portfolio of Federated Municipal Securities Income Trust Before you invest, you may want
More informationFederated Quality Bond Fund II
Summary Prospectus April 30, 2015 Share Class Primary Federated Quality Bond Fund II A Portfolio of Federated Insurance Series Before you invest, you may want to review the Fund s Prospectus, which contains
More informationWST ASSET MANAGER U.S. EQUITY FUND
Prospectus December 18, 2015 WST ASSET MANAGER U.S. EQUITY FUND Investor Shares (Ticker Symbol: WSTEX) Institutional Shares (Ticker Symbol: WSTIX) WST ASSET MANAGER U.S. BOND FUND Investor Shares (Ticker
More informationAverage Annualized Return as of 11/30/2015 1. YTD 1 Year 3 Years 5 Years
Investment Options at a glance Current performance may be lower or higher than performance data shown. Performance data quoted represents past performance and is not a guarantee or prediction of future
More informationBalanced Fund RPBAX. T. Rowe Price SUMMARY PROSPECTUS
SUMMARY PROSPECTUS RPBAX May 1, 2016 T. Rowe Price Balanced Fund A fund seeking capital growth and current income through a portfolio of approximately 65% stocks and 35% fixed income securities. Before
More informationSTEWARD FUNDS MANAGING WEALTH, PROTECTING VALUES SOCIALLY RESPONSIBLE SCREENED FUNDS. PROSPECTUS August 28, 2015
STEWARD FUNDS MANAGING WEALTH, PROTECTING VALUES SOCIALLY RESPONSIBLE SCREENED FUNDS Steward Large Cap Enhanced Index Fund Individual Class SEEKX Institutional Class SEECX Steward Small-Mid Cap Enhanced
More informationOpportunity in leveraged companies
February 2015» White paper Opportunity in leveraged companies David L. Glancy Portfolio Manager Key takeaways Leverage can create attractive investment opportunities. Leveraged-company securities offer
More informationMainStay VP Janus Balanced Portfolio
Summary Prospectus May 1, 2015 MainStay VP Janus Balanced Portfolio To Statutory Prospectus To Statement of Additional Information Before you invest, you may want to review the Portfolio's Prospectus,
More informationFixed Income in a Rising Rate Environment
Fixed Income in a Rising Rate Environment With interest rates at historically low levels, fixed income investors have become increasingly concerned about rising rates and how their portfolios might be
More informationPIMCO Foreign Bond Fund (U.S. Dollar- Hedged)
Your Global Investment Authority PIMCO Foreign Bond Fund (U.S. Dollar- Hedged) SUMMARY PROSPECTUS July 31, 2015 (as supplemented December 1, 2015) Share Class: Inst P Admin D A C R Ticker: PFORX PFBPX
More informationT. Rowe Price International Bond Fund T. Rowe Price International Bond Fund Advisor Class
T. Rowe Price International Bond Fund T. Rowe Price International Bond Fund Advisor Class Supplement to Prospectuses Dated May 1, 2015 In section 1, the portfolio manager table under Management with respect
More informationFixed Income Investing
Fixed Income Investing Why Invest in Fixed Income Fixed income securities (bonds) are a fundamental part of an investing plan for most investors. There are many types of bonds along with varied approaches
More informationT HE H ARTFORD F LOATING R ATE F UND Helping Investors Prepare for Rising Interest Rates
T HE H ARTFORD F LOATING R ATE F UND Helping Investors Prepare for Rising Interest Rates Michael J. Bacevich Portfolio Manager The Hartford Floating Rate Fund John P. Connor Portfolio Manager The Hartford
More informationEvergreen INSTITUTIONAL MONEY MARKET FUNDS. Prospectus July 1, 2009
Evergreen INSTITUTIONAL MONEY MARKET FUNDS Prospectus July 1, 2009 Evergreen Institutional 100% Treasury Money Market Fund Evergreen Institutional Money Market Fund Evergreen Institutional Municipal Money
More informationStable Value Option. New York Life Insurance Company Anchor Account III As of 9/30/2011 INVESTMENT OBJECTIVE SECTOR DIVERSIFICATION. Cash --- 5.
Stable Value Option The Stable Value Option seeks to provide a low-risk stable investment, offering competitive yields and limited volatility, with guarantee of principal and accumulated interest. Until
More informationBRANDES. Brandes Core Plus Fixed Income Fund Class A BCPAX Class E BCPEX Class I BCPIX. Brandes Credit Focus Yield Fund Class A BCFAX Class I BCFIX
BRANDES Brandes Core Plus Fixed Income Fund Class A BCPAX Class E BCPEX Class I BCPIX Brandes Credit Focus Yield Fund Class A BCFAX Class I BCFIX Prospectus January 30, 2015 The U.S. Securities and Exchange
More information30% 5% of fixed income mutual funds paid capital gains in 2015
FIXED INCOME ETFs: NEW ASSET CLASS, SAME BENEFITS Exchange Traded Funds ( ETFs ) first appealed to equity investors, providing efficient access to the world s stock markets and they have revolutionized
More informationPreparing for a Rise in Interest Rates
Strategies for fixed-income investors Preparing for a Rise in Interest Rates Today s historically low interest rates probably won t last forever. Rising interest rates can have a significant negative effect
More informationWhat Investors Should Know about Money Market Reforms
What Investors Should Know about Money Market Reforms What Investors Should Know about Money Market Reforms Executive Summary Ò New SEC regulations for the $2.7 trillion money market industry may present
More informationGuggenheim BulletShares ETFs An In-Depth Look at Defined Maturity ETFs
Guggenheim BulletShares ETFs An In-Depth Look at Defined Maturity ETFs Contents I. A Whole New Range of Opportunities for Investors 1 II. A New Era in Fixed Income Investing 2 III. Understanding Fund Distributions
More informationABF PAN ASIA BOND INDEX FUND An ETF listed on the Stock Exchange of Hong Kong
Important Risk Disclosure for PAIF: ABF Pan Asia Bond Index Fund ( PAIF ) is an exchange traded bond fund which seeks to provide investment returns that corresponds closely to the total return of the Markit
More informationPowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1
PowerShares Smart Beta Income Portfolio 2016-1 PowerShares Smart Beta Growth & Income Portfolio 2016-1 PowerShares Smart Beta Growth Portfolio 2016-1 The unit investment trusts named above (the Portfolios
More informationThe role of floating-rate bank loans in institutional portfolios
By: Martin Jaugietis, CFA; Director, Head of Liability Driven Investment Solutions DECEMBER 2011 Yoshie Phillips, CFA, Senior Research Analyst Maniranjan Kumar, Associate The role of floating-rate bank
More informationDocumeent title on one or two. high-yield bonds. Executive summary. W Price (per $100 par) W. The diversification merits of high-yield bonds
April 01 TIAA-CREF Asset Management Documeent title on one or two The lines enduring Gustan case Book for pt high-yield bonds TIAA-CREF High-Yield Strategy Kevin Lorenz, CFA Managing Director Co-portfolio
More informationIU Tax Deferred Annuity Plan (51913) IU TDA Plan. Start investing in yourself today, with help from IU TDA Plan and Fidelity.
IU Tax Deferred Annuity Plan (51913) IU TDA Plan Start investing in yourself today, with help from IU TDA Plan and Fidelity. Invest some of what you earn today for what you plan to accomplish tomorrow.
More informationDaily Income Fund Retail Class Shares ( Retail Shares )
Daily Income Fund Retail Class Shares ( Retail Shares ) Money Market Portfolio Ticker Symbol: DRTXX U.S. Treasury Portfolio No Ticker Symbol U.S. Government Portfolio Ticker Symbol: DREXX Municipal Portfolio
More information- Short term notes (bonds) Maturities of 1-4 years - Medium-term notes/bonds Maturities of 5-10 years - Long-term bonds Maturities of 10-30 years
Contents 1. What Is A Bond? 2. Who Issues Bonds? Government Bonds Corporate Bonds 3. Basic Terms of Bonds Maturity Types of Coupon (Fixed, Floating, Zero Coupon) Redemption Seniority Price Yield The Relation
More informationAmerican Funds Insurance Series. U.S. Government/ AAA-Rated Securities Fund. Summary prospectus Class 3 shares May 1, 2016
American Funds Insurance Series U.S. Government/ AAA-Rated Securities Fund Summary prospectus Class 3 shares May 1, 2016 Before you invest, you may want to review the fund s prospectus and statement of
More informationInvestment insight. Fixed income the what, when, where, why and how TABLE 1: DIFFERENT TYPES OF FIXED INCOME SECURITIES. What is fixed income?
Fixed income investments make up a large proportion of the investment universe and can form a significant part of a diversified portfolio but investors are often much less familiar with how fixed income
More informationSACRS Fall Conference 2013
SACRS Fall Conference 2013 Bank Loans November 14, 2013 Allan Martin, Partner What Are Floating Rate Bank Loans? Senior secured floating rate debt: Current Typical Terms: Spread: LIBOR + 5.00%-6.00% LIBOR
More information