Finding income and managing risk in a near-zero interest-rate environment
|
|
- Hector Gallagher
- 8 years ago
- Views:
Transcription
1 Aging Workforce Series Finding income and managing risk in a near-zero interest-rate environment William Martin, Head of Fixed-Income Portfolio Management TIAA-CREF Executive Summary Yields in traditional fixed-income strategies are near rock-bottom, causing many investors to seek other opportunities to meet income requirements. The current low-yield landscape raises important issues, including where to find adequate income, how to address the risk of rising rates and how to protect against the potential for higher inflation. Some non-traditional sources of yield include emerging-market debt, U.S. high-yield debt, dividend-paying stocks, real assets and commodities. A well-diversified fixed-income portfolio may provide income and generate positive returns even in a rising rate environment. We expect to see modestly higher rates into year-end, and we remain constructive on the potential for fixed-income returns in Led by waves of retiring Baby Boomers, investors have allocated more than $1 trillion to bond funds and pulled more than a half trillion from stock funds since 2008 at a time when interest rates have fallen to historically-low levels. Bonds can produce regular coupon (interest) payments and are often less volatile than stocks, especially during market downturns. These are big pluses for investors seeking capital preservation and an income stream. Yields in the traditional high-quality havens favored by income seekers are near rock-bottom, however, causing many to look for other opportunities to satisfy their income requirements. The current low-yield landscape raises important issues for all investors, including where to find adequate income, how to address the risk of rising rates and how to protect against the potential for higher inflation. Interest rates could remain low for at least the next two to three years as the Federal Reserve has committed to keeping them there until 2015 to stimulate job creation and economic growth. As the economy continues to improve, however, rates could begin to increase as investors seek to move out of bonds and into riskier investments such as stocks. In this article, we will look at some non-traditional options for sourcing yield and for managing risk in the current low-yield environment. 1
2 Figure 1: Cumulative flows into stock and bond funds since 2008 billions Taxable bond funds Thinking beyond the Agg $1.1 trillion into bonds $509.6 billion out of stocks Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Stock funds Source: Investment Company Institute, cumulative monthly net flows into retail equity and taxable fixed-income mutual funds, as of March 2013 For retirement-plan participants, an increased exposure to fixed income often means adding more holdings based on the Barclays U.S. Aggregate Bond Index, a benchmark widely used by the industry for managing fixed-income strategies. Known as the Agg, the index covers more than 8,000 bonds, mostly domestic investment-grade issues, including corporate, U.S. government, and mortgage-backed securities. Approximately $4 trillion in investor assets are managed against the Agg, as it provides access to a deep, broad and liquid universe. The index has posted only two years of negative returns (1994, -2.9% and 1999, -0.8%) since 1976, which is a testament to the endurance and sturdiness of the U.S. investment-grade bond market over the last several decades. In recent years the index composition has changed, however, reflecting the evolving nature of debt issuance. For example, as U.S. government debt issuance has increased to record levels, so has its presence in the index, which is capitalization-weighted. As of the end of March, 37% of the index was comprised of U.S. Treasuries, versus about 21% a decade ago, though this figure has fluctuated over the years. Corporate bonds, which are higher-yielding, are a much lower component of the index today versus a decade ago. There are many options outside of the Agg to consider, including some that offer income-generating opportunities. As with all investments, there is no such thing as a silver bullet, as all approaches involve risk. Emerging-market debt International fixed-income markets have matured over the last two decades and far surpass the U.S. market in terms of total issuance size. The non-u.s. debt market is roughly $74 trillion, nine times what it was in 1989 and almost triple the size of the U.S. debt market. 1 One fast-growing segment of the international market is emerging-market debt. The credit quality of emerging market issuers has also improved, as the percentage of investment-grade EM countries has increased from 39% in 2007 to 62% in The advantage of having an allocation to EM debt has been evident in recent years, including in 2012, when returns for these markets led the way (see Figure 3). As of early April 2013, EM government debt was yielding 5.2%, compared to 1.86% for the broad U.S. bond market. 3 Figure 2: Difficult to find yield in investment-grade domestic bonds % Jan-99 Aug-99 Mar-00 Oct-00 May-01 Dec-01 Jul-02 Feb-03 Sep-03 Apr-04 Nov-04 Jun-05 Jan-06 Aug-06 Mar-07 Oct-07 May-08 Dec-08 Jul-09 Feb-10 Sep-10 Apr-11 Nov-11 Jun-12 Jan-13 BBB Corporate Bonds Mortgage Master Treasury/Agency Master: AAA Rated Corporate Bonds 5-7 yrs Broad Bond Market Source: Bank of America Merrill Lynch, yield-to-maturity, end of period as of February 28,
3 Figure 3: Fixed-income market returns in % 15% 18.14% 15.81% 10% 5% 9.82% 9.66% 6.98% 4.21% 3.66% 3.02% 2.59% 1.99% 0% Global EM High Yield Corporate CMBS Inflationlinked Barclays Agg ABS Agency MBS Treasury Source: FactSet, as of April The performance discussion above concerns various market indices. It is not possible to invest in an index. Performance for indices does not reflect investment fees or transactions costs. By making an international allocation, investors may improve risk-adjusted returns versus a fixed-income strategy focused solely on the domestic U.S. market. Despite these returns, EM investing involves many risks, including the potential for currency risk, however, which investors should consider carefully. U.S. high-yield debt U.S. high-yield debt offers another way to help build a diversified portfolio. High-yield debt has low correlations to investment-grade fixed income and may offer lower sensitivity to rising interest rates than Treasuries. Yields in the high-yield segment are also currently near record lows (6.14% as of early April), which could make an allocation challenging now, though spreads remain above pre-crisis levels, providing cushion to our current forecast for highyield defaults. 4 As economic activity continues to pick up, the risk of issuer default one of the primary risks of investing in high yield debt should remain steady or even decline, as measured by the credit default rate. 5 High-yield bonds have historically outperformed investmentgrade corporate bonds and have exhibited performance characteristics that are similar to stocks, but with less volatility. This may make high-yield bonds an attractive middle ground for investors looking for a mix of risk/ reward options plus attractive yields. Dividend-paying stocks Historically, yields on bonds exceed those of stocks and usually by a wide margin. The yields of these two asset classes converged during the financial crisis as investors piled into bonds, bidding up prices and causing yields to dip. Nowadays, the yield on the S&P 500 Index is competitive with the yield on 10-year Treasury notes. (Of course, despite offering competitive yield, stocks have risk characteristics that are far different from those for bonds.) While these relative yields are an interesting market anomaly, we expect the historical relationship between equities and fixed income to eventually normalize as the economy stabilizes and the Federal Reserve shifts away from quantitative easing. An income-seeker with a longer-time horizon may consider stocks as part of an overall strategy. Real assets Real assets refer to investments such as precious metals, commodities and property. Many real assets have highly favorable economics that is, the end products are in demand by a growing world population and there is only so much supply. The assets also have the advantage of not being highly correlated with traditional fixed-income securities. Real assets often offer hybrid investment characteristics equity-like upside along with relatively stable bond-like income. TIAA-CREF, for instance, invests in timberland in North and South America, Australia and New Zealand. These strategies provide diversification and income, in addition to inflation-hedging benefits. Investment strategies like these are becoming more common and available to more investors as they provide another incomegenerating option. 6 Fixed annuities In an era of low interest rates, annuities may have an increasing role to play in retirement planning as they can offer steady income. With fixed or guaranteed annuities, the issuer, not the contract owner, assumes all investment risk. 3
4 Figure 4: Equity yields edged higher than bonds % Jan-03 Jun-03 Nov-03 Apr-04 Sep-04 Feb-05 Jul-05 Dec-05 May-06 Oct-06 Mar-07 Aug-07 Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Feb-13 S&P: Composite 500, Dividend Yield (%) 10-Year Treasury Note Yield at Constant Maturity (% p.a.) Source: Haver Analytics, as of April Fixed annuities offer a guaranteed payment, with the payout amount calculated in part based on the assumed future returns of the investments in the underlying portfolio that supports the annuity s guarantees, and on the annuitant s life expectancy. All guarantees are based upon the claims-paying ability of the issuing insurance company. The payment can be fixed for life or can allow for future increases. Fixed annuity payments are not negatively impacted by changing interest rates, though bond values may fluctuate. This characteristic of annuities may provide enhanced diversification and offer greater ability to control risk in a broader portfolio. The risk of rising rates and inflation There are two major risks in bond investing: credit risk (risk of issuer default) and interest-rate risk. Many investors are concerned with interest-rate risk, as rates are expected by many to increase in the months and possibly years to come. While the Federal Reserve has committed to keeping its short-term policy rates low until 2015, market effects could trigger rate increases before then. As the economy improves, investors may move from safe havens such as Treasuries and other U.S. government securities into riskier asset classes such as stocks and high-yield debt. With less demand for conservative bonds, interest rates may rise. Some bonds are more sensitive to rising rates than others, which is why duration is a critical concept to understand in fixed-income investing. Duration is a measurement of a bond or bond fund s sensitivity to a change in interest rates, expressed in a number of years. Bond values fluctuate with rising and falling interest rates. Bonds and bond funds with longer duration tend to be more sensitive to rising and falling rates. Longer duration has helped some bonds outperform during a declining rate environment, but that same attribute could cause underperformance versus shorter-duration bonds in a rising rate environment. Duration of the Barclays U.S. Aggregate Bond Index, for example, was 5.26 years compared to 4.34 years on the Barclays High Yield Very Liquid Index in early April, which would indicate that the Agg is more sensitive to rate changes than the high yield index, though the high-yield index may exhibit greater spread volatility. 7 High-yield bonds also typically appreciate in value when the economy improves, as default rates tend to fall, and investors seek opportunities for achieving greater returns. High-yield spreads, or the difference in yield between high-yield bonds and similar Treasury bonds, tend to narrow when an economy improves, which indicates investor demand for the asset class. Inflation is also problematic for bonds, since it erodes the value of the fixed payments that they generate. As the real value of those fixed payments declines, there is generally a fall in the price of the underlying security. There are a number of ways to invest in fixed income while seeking to minimize exposure to rising rates and inflation, including investing in bonds and funds with shorter duration. Treasury Inflation-Protected Securities (TIPS), floating-rate loans and other inflation-sensitive assets, such as commodities and real estate, also offer opportunities to manage risk in, and add return to, a fixed-income strategy. At TIAA-CREF, we believe it is possible to mitigate rising rates and maintain high levels of liquidity while generating attractive returns. We look for opportunities to invest in high-yield, emerging-market debt, leveraged loans which are sectors that tend to offer portfolio protection and yield opportunities when interest rates rise, while other sectors, such as U.S. Treasuries, generally underperform during these periods. When we see increased potential for rising rates, we look for opportunities in these sectors, and for opportunities to maintain the flexibility to move in or out of a position, or hold onto bonds that will continue to provide income and stability during uncertain times. 4
5 Finding income and managing risk Expanding diversification in a fixed-income portfolio Retirees not long ago could park capital in low-risk forms of debt and be confident about preserving the value of their investment. In the year 2000, for instance, $100,000 invested in U.S. Treasury bills would have produced close to $5,700 over the course of the year a 5.7% rate of interest, and more than enough to compensate for that year s 3.4% inflation rate. Those days are a memory. Today, $100,000 invested in Treasury bills would produce an anemic $110 over the course of a year, 8 which is not nearly enough to keep pace with inflation, which averaged 2.1% in A well-diversified fixed-income portfolio that includes exposure to a range of incomeproducing asset classes has the potential to provide income and generate positive returns even in a rising-rate environment. Barring a large, unexpected rate spike, we expect to see modestly higher rates into year-end, and we remain constructive on the potential for fixedincome returns in Investors should consider their views on inflation, their risk tolerance and their specific investment goals when making an allocation to any asset class. Knowing and understanding the composition of a bond portfolio can help investors understand how their investments may perform under different scenarios, including under low-rate and rising-rate conditions. C Bank for International Settlements data as of JP Morgan Emerging Market Global Diversified Index 3. Yield-to-maturities of the Barclays EM Local Currency Government Diversified and Barclays U.S. Aggregate Bond Indexes. 4. As measured by the yield-to-maturities of the Barclays High Yield Very Liquid Index. 5. The U.S. high yield default rate was 1.9% in 2012, and is expected to remain around the same in 2013, according to Fitch Ratings. The average rate since 2000 is 5.4%. 6. For example, retail alternative asset strategies such as commodities, real estate and precious metals, offered in regulated ETF and mutual fund vehicles grew at a 21% annualized rate to roughly $626 billion in total assets from 2005 to 2011, according to McKinsey & Company research. Real Asset and Commodity investments may be subject to substantial volatility. 7. As measured by the modified adjusted duration, an indicator of a portfolio s sensitivity to rising interest rates. Spread volatility measures the difference between high yield and Treasury bill interest rates. 8. Based on an interest rate of 0.11% for a 1-year T-Bill as of April 17, The information provided herein is as of April 20, The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons. TIAA-CREF Asset Management provides investment advice and portfolio management services to the TIAA- CREF group of companies through the following entities: Teachers Advisors, Inc., TIAA-CREF Investment Management, LLC, and Teachers Insurance and Annuity Association (TIAA ). Teachers Advisors, Inc, is a registered investment advisor and wholly owned subsidiary of Teachers Insurance and Annuity Association (TIAA). Past performance is no guarantee of future results. Please note that diversification is a technique to help reduce risk. There is no guarantee that diversification will protect against a loss of income. Past performance does not guarantee future results. Please note that fixed income and equity investing involve risk _ A14008 (04/13)
Documeent 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 informationThe recent volatility of high-yield bonds: Spreads widen though fundamentals stay strong
Investment Insights The recent volatility of high-yield bonds: Spreads widen though fundamentals stay strong Kevin Lorenz, CFA, Managing Director, Lead Portfolio Manager of TIAA-CREF's High-Yield Fund
More informationDocumeent title on one or two. high-yield bonds. Executive summary. W Price (per $100 par) W Yield to worst 110
May 2015 TIAA-CREF Asset Management Documeent title on one or two The lines enduring Gustan case Book for 24pt high-yield bonds TIAA-CREF High-Yield Strategy Kevin Lorenz, CFA Managing Director Portfolio
More informationDocumeent title on one or two. high-yield bonds. Executive summary. W Price (per $100 par) W Yield to worst 110
April 2014 TIAA-CREF Asset Management Documeent title on one or two The lines enduring Gustan case Book for 24pt high-yield bonds TIAA-CREF High-Yield Strategy Kevin Lorenz, CFA Managing Director Portfolio
More informationUnderstanding the causes and implications of a less liquid trading environment. Executive summary
Fall 2015 TIAA-CREF Asset Management Reduced Documeent liquidity: title A on new one reality or two for lines fixed-income in Gustan Book markets 24pt Understanding the causes and implications of a less
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 informationExtended Strategy Descriptions for The Boeing Company Voluntary Investment Plan (VIP)
Extended Strategy Descriptions for The Boeing Company Voluntary Investment Plan (VIP) Strategy descriptions are effective December 12, 2014, unless otherwise noted. U.S. Large Companies Fund The fund invests
More informationAn Attractive Income Option for a Strategic Allocation
An Attractive Income Option for a Strategic Allocation Voya Senior Loans Suite A strategic allocation provides potential for high and relatively steady income through most credit and rate cycles Improves
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 informationDeutsche Alternative Asset Allocation VIP
Alternative Deutsche Alternative Asset Allocation VIP All-in-one exposure to alternative asset classes : a key piece in asset allocation Building a portfolio of stocks, bonds and cash has long been recognized
More informationFinding yield in dividendpaying
Market & Investment Insights Finding yield in dividendpaying stocks Mike Holbert, Portfolio Manager, Active Equities Article Highlights: Low interest rates have spurred investors to search for yield outside
More informationA case for high-yield bonds
By: Yoshie Phillips, CFA, Senior Research Analyst MAY 212 A case for high-yield bonds High-yield bonds have historically produced strong returns relative to those of other major asset classes, including
More informationStructured Products. Designing a modern portfolio
ab Structured Products Designing a modern portfolio Achieving your personal goals is the driving motivation for how and why you invest. Whether your goal is to grow and preserve wealth, save for your children
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 informationThe case for high yield
The case for high yield Jennifer Ponce de Leon, Vice President, Senior Sector Leader Wendy Price, Director, Institutional Product Management We believe high yield is a compelling relative investment opportunity
More informationEvolution of GTAA Investment Styles. In This Issue: June 2012
June 2012 ALPHA GROUP TOPIC The Alpha Group researches investment managers. In This Issue: n Evolution of GTAA Investment Styles n Risk-Parity vs. GTAA Managers n Implementation n Investing in a GTAA Strategy
More informationTHE CASE FOR GUARANTEED ANNUITIES IN DEFINED CONTRIBUTION PLANS
OCTOBER 2010 THE CASE FOR GUARANTEED ANNUITIES IN DEFINED CONTRIBUTION PLANS HELPING PLAN FIDUCIARIES CLOSE THE RETIREMENT INCOME GAP Executive Summary Millions of Americans rely on defined contribution
More informationThe Impact of Interest Rates on Real Estate Securities
The Impact of Interest Rates on Real Estate Securities The challenge for real estate securities investors is determining how monetary policy and interest rates affect prices and returns. Highlights Not
More informationFixed Income: The Hidden Risk of Indexing
MANNING & NAPIER ADVISORS, INC. Fixed Income: The Hidden Risk of Indexing Unless otherwise noted, all figures are based in USD. Fixed income markets in the U.S. are vast. At roughly twice the size of domestic
More informationA case for high-yield bonds
By: Yoshie Phillips, CFA, Senior Research Analyst AUGUST 212 A case for high-yield bonds High-yield bonds have historically produced strong returns relative to those of other major asset classes, including
More informationHow To Invest In High Yield Bonds
Investment Perspectives For high-yield bonds, market volatility can bring new opportunities Kevin Lorenz and Jean Lin, portfolio managers for TIAA-CREF High-Yield Fund Article Highlights: The decline in
More informationThe timeless (and timely) case for high-yield bonds
EATON VANCE TOPIC PAPER MAY 2016 The timeless (and timely) case for high-yield bonds Michael Weilheimer, CFA Director High-Yield Investments Steve Concannon Portfolio Manager High-Yield Investments Jeff
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 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 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 informationAnnual Treasury And Investment Portfolio Update for 2015
Item No.: 7d_Supp Meeting Date: March 8, 2016 Annual Treasury And Investment Portfolio Update for 2015 Commission Briefing Presented by Diane Campbell March 8, 2016 Treasury Management Update Background
More informationRisks and Rewards in High Yield Bonds
Risks and Rewards in High Yield Bonds Peter R. Duffy, CFA, Partner, Senior Portfolio Manager Navy Yard Corporate Center, Three Crescent Drive, Suite 400, Philadelphia, PA 19112 www.penncapital.com 1 What
More informationINSTITUTIONAL INVESTMENT & FIDUCIARY SERVICES: Building a Better Portfolio: The Case for High Yield Bonds
14\GBS\22\25062C.docx INSTITUTIONAL INVESTMENT & FIDUCIARY SERVICES: Building a Better Portfolio: The Case for High Yield Bonds By Adam Marks, Area Vice President and Jamia Canlas, Senior Analyst By looking
More informationUncovering Income in a Rising-Rate Environment
ederated Uncovering Income in a Rising-Rate Environment NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE The Yield-Seekers Challenge Strategies for a Rising-Rate Environment As the economy continues to
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 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 informationPRINCIPAL ASSET ALLOCATION QUESTIONNAIRES
PRINCIPAL ASSET ALLOCATION QUESTIONNAIRES FOR GROWTH OR INCOME INVESTORS ASSET ALLOCATION PRINCIPAL ASSET ALLOCATION FOR GROWTH OR INCOME INVESTORS Many ingredients go into the making of an effective investment
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 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 informationBlackRock Diversa Volatility Control Index *
BlackRock Diversa Volatility Control Index * FOR FIXED INDEX ANNUITIES * Formally known as BlackRock ibld Diversa VC7 ER Index NOT FOR USE IN IOWA FA7363 (2-5) 02545 205 Forethought In order to protect
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 informationANY GAS LEFT IN THE HIGH-YIELD MUNICIPAL TANK?
May 9, 2016 ANY GAS LEFT IN THE HIGH-YIELD MUNICIPAL TANK? A favorable credit environment and technical factors have contributed to strong high-yield municipal performance. We see limited room for further
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 informationAre you protected against market risk?
Are you protected against market risk? The Aston Hill Capital Growth Fund provides low volatility access to U.S. equities with a strong focus on downside protection. Since taking over management of the
More informationMutual Funds Made Simple. Brighten your future with investments
Mutual Funds Made Simple Brighten your future with investments About Invesco Aim When it comes to investing, your sights are set on a financial summit a college diploma, new home or secure retirement.
More informationIncome Solutions Framework
Income Solutions Framework GWM Investment Management & Guidance summer 2015 Yago Gonzalez, CFA, Director, Senior Portfolio Manager Himanshu Almadi, Director, Senior Portfolio Manager Rajesh Kohli, CFA,
More information3Q14. Are Unconstrained Bond Funds a Substitute for Core Bonds? August 2014. Executive Summary. Introduction
3Q14 TOPICS OF INTEREST Are Unconstrained Bond Funds a Substitute for Core Bonds? August 2014 Executive Summary PETER WILAMOSKI, PH.D. Director of Economic Research Proponents of unconstrained bond funds
More informationCHOOSING YOUR INVESTMENTS
CHOOSING YOUR INVESTMENTS FOR ASSISTANCE CONTACT US TODAY FOR MORE INFORMATION, ADVICE OR HELP OPENING AN ACCOUNT, IT S EASY TO REACH US: BY PHONE Call us at 800 TIAA-CREF (800 842-2273) to speak with
More informationCapital preservation strategy update
Client Education Summit 2012 Capital preservation strategy update Head of Institutional Fixed Income Investments, Americas October 9, 2012 Topics for discussion 1 Capital preservation strategies 2 3 4
More informationCFA Institute Contingency Reserves Investment Policy Effective 8 February 2012
CFA Institute Contingency Reserves Investment Policy Effective 8 February 2012 Purpose This policy statement provides guidance to CFA Institute management and Board regarding the CFA Institute Reserves
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 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 informationQuarterly Asset Class Report Institutional Fixed Income
Quarterly Asset Class Report Institutional Presentation To: Presented By: canterburyconsulting.com September 30, 015 Role in the Canterbury Consulting recommends and communicates asset-class strategy with
More informationINVESTING MADE SIMPLE
Investing Fundamentals INVESTING MADE SIMPLE AN EDUCATIONAL GUIDE FOR EVERY INVESTOR. INVEST WITH CONFIDENCE. HuntingtonFunds.com 1 1 Your Guide to the Basics of Investing Through Mutual Funds Mutual funds
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 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 informationSeeking a More Efficient Fixed Income Portfolio with Asia Bonds
Seeking a More Efficient Fixed Income Portfolio with Asia s Seeking a More Efficient Fixed Income Portfolio with Asia s Drawing upon different drivers for performance, Asia fixed income may improve risk-return
More informationFIXED INCOME. Finding new strategies for uncertain markets
FIXED INCOME Finding new strategies for uncertain markets Three things to know about today s bond market 1 Declining interest rates have driven bond returns higher for more than 20 years In general, bonds
More informationDesigning The Ideal Investment Policy Presented To The Actuaries Club of the Southwest & the Southeastern Actuarial Conference
Designing The Ideal Investment Policy Presented To The Actuaries Club of the Southwest & the Southeastern Actuarial Conference Presented by: Greg Curran, CFA & Michael Kelch, CFA AAM - Insurance Investment
More informationFixed Income Liquidity in a Rising Rate Environment
Fixed Income Liquidity in a Rising Rate Environment 2 Executive Summary Ò Fixed income market liquidity has declined, causing greater concern about prospective liquidity in a potential broad market sell-off
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 informationRethinking fixed income. By Trevor t. Oliver
12 Rethinking fixed income By Trevor t. Oliver Summer/Fall 2012 The Participant : Issue 02 ssga.com/dc/theparticipant 13 The landscape for this asset class has changed. Our approach should too. Investors
More informationGlobal Markets Insights
Global Markets Insights Inefficiencies and opportunities in today s fixed-income markets Agenda Today s fixed-income asset-allocation challenge 1 Volatility expectations 2 Correlation expectations 3 Return
More informationA Case for Investing in Fixed Income
A Case for Investing in Fixed Income Fixed income is considered a defensive asset class and is designed to achieve stable returns in the form of income, often with little or no capital growth. This is
More informationWhy own bonds when yields are low?
Why own bonds when yields are low? Vanguard research November 213 Executive summary. Given the backdrop of low yields in government bond markets across much of the developed world, many investors may be
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 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 informationAre Unconstrained Bond Funds a Substitute for Core Bonds?
TOPICS OF INTEREST Are Unconstrained Bond Funds a Substitute for Core Bonds? By Peter Wilamoski, Ph.D. Director of Economic Research Philip Schmitt, CIMA Senior Research Associate AUGUST 2014 The problem
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 informationMutual Fund Portfolios Asset Allocation
Morningstar Investment Services Mutual Fund Portfolios Asset Allocation Broad diversification, distinctive, independent research and progressive risk management in five core model portfolios that span
More informationThe Evolution of High-Yield Bonds into a Vital Asset Class
Allianz Global Investors White Paper Series The Evolution of High-Yield Bonds into a Vital Asset Class Executive Summary With high-quality bond yields near all-time lows, investors have looked to high-yield
More informationCapital Markets Review Q3 2010
Capital Markets Review Q3 2010 Reviewing the quarter ended June 30, 2010 Ross Marino, CFP, ChFC 210-4 Avondale Ave. Wilmington, NC 28403 www.rossmarino.com Material prepared by Raymond James for use by
More informationDiminished Liquidity in the Corporate Bond Market: Implications for Fixed Income Investors
Diminished Liquidity in the Corporate Bond Market: Implications for Fixed Income Investors 3/16/215 Summary In the wake of the 27-8 Financial Crisis, investors increased their holdings of fixed income
More informationCHOOSING YOUR INVESTMENTS
CHOOSING YOUR INVESTMENTS KANSAS BOARD OF REGENTS MANDATORY RETIREMENT PLAN FOR ASSISTANCE GO ONLINE For more information on your retirement plan, investment education, retirement planning tools and more,
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 informationHow to make changes to your annuity income
How to make changes to your annuity income What s inside 2 Is it time to make a change? 3 Your annuity income 5 TIAA Traditional income 7 TIAA and CREF variable income 10 Ways to adjust your annuity income
More informationFIXED INCOME REDEFINED FOR A 2%
FIXED INCOME REDEFINED FOR A 2% WORLD It s a question on the minds of many fixed income investors these days: how should investors think about their fixed income allocation in a world of very low interest
More informationOverview of Your TIAA-CREF Investment Solutions SM Accounts
Overview of Your TIAA-CREF Investment Solutions SM Accounts TIAA-CREF Investment Solutions SM now offers you nine mutual funds in addition to our fixed and variable annuity accounts. TIAA-CREF Investment
More informationLONG-TERM INVESTMENT PERFORMANCE
LONG-TERM INVESTMENT PERFORMANCE Source: Created by Raymond James using Ibbotson Presentation Materials 2011 Morningstar. All Rights Reserved. 3/1/2011 Used with permission. TYPES OF ASSET CLASSES Stocks
More informationNavigating Rising Rates with Active, Multi-Sector Fixed Income Management
Navigating Rising Rates with Active, Multi-Sector Fixed Income Management With bond yields near 6-year lows and expected to rise, U.S. core bond investors are increasingly questioning how to mitigate interest
More informationThe Fixed Income Conundrum What s your next move?
What s your next move? For some time, low yields have been a reality in the bond market, leading many investors to hail a new normal that is both persistent and uncharted. Government bond yields in North
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 informationRISK ASSESSMENT QUESTIONNAIRE
Time Horizon 6/14 Your current situation and future income needs. 1. What is your current age? 2. When do you expect to start drawing income? A Less than 45 A Not for at least 20 years B 45 to 55 B In
More informationOpportunities and risks in credit. Michael Korber Head of Credit
Opportunities and risks in credit Michael Korber Head of Credit August 2009 Overview Fixed income assets, characteristics and risks Where the current opportunity is in fixed income markets How to access
More informationAn Overview of the US Closed-End Fund Market. By Paul Mazzilli
An Overview of the US Closed-End Fund Market By Paul Mazzilli Introduction Closed-end funds (CEFs) are professionally managed investment companies that offer investors various unique benefits. They offer
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 information2012 First Quarter Equity Market Review
Investment Insights 2012 First Quarter Equity Market Review By William Riegel, Head of Equity Investments After a volatile year in 2011, equity markets grew more confident in the first quarter of 2012.
More informationBond Market Perspectives
LPL FINANCIAL RESEARCH Bond Market Perspectives March 26, 2013 High-Yield Bonds and the Credit Cycle Anthony Valeri, CFA Market Strategist LPL Financial Highlights More speculative issuance has increased
More informationAbsolute return strategies offer modern diversification
February 2015» White paper Absolute return strategies offer modern diversification Key takeaways Absolute return differs from traditional stock and bond investing. Absolute return seeks to reduce market
More informationEconomic & Market Outlook
Monthly Portfolio Commentary December 31, 2015 Economic & Market Outlook Stocks rebounded in 2015 s fourth quarter, but provided little reward for the year as a whole. The S&P 500 Index recovered from
More information5Strategic. decisions for a sound investment policy
5Strategic decisions for a sound investment policy 1 An investment policy sets your course for the long term. Managers of billion-dollar pension and endowment funds know it s nearly impossible to beat
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 informationDSIP List (Diversified Stock Income Plan)
Kent A. Newcomb, CFA, Equity Sector Analyst Joseph E. Buffa, Equity Sector Analyst DSIP List (Diversified Stock Income Plan) Commentary from ASG's Equity Sector Analysts January 2014 Concept Review The
More informationDistinguishing duration from convexity
Distinguishing duration from convexity Vanguard research May 010 Executive summary. For equity investors, the perception of risk is generally straightforward: Market risk the possibility that prices may
More informationImpact of rising interest rates on equity markets
Fall 2015 TIAA-CREF Asset Management Impact of rising interest rates on equity markets Executive summary Saira Malik, CFA Managing Director, Head of Global Active Equity Portfolio Management, TIAA-CREF
More informationCity and County of Denver Investment Portfolio Performance Report
Cash & Sr. Report I. Discussion of Volatility returned to capital markets during the third quarter of 2015. Concerns over the impact of an economic slowdown in China, along with mediocre domestic economic
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 informationRedefining Risk in Fixed Income
Investment Insights Series l April 2011 Redefining Risk in Fixed Income What most investors don t know about the new risks in fixed income Summary The world has changed for fixed income investors. The
More informationHigh-yield bonds have become a global opportunity
By: Yoshie Phillips, CFA, Senior Research Analyst APRIL 2013 High-yield bonds have become a global opportunity Investors seeking income or attractive total return investments often look into high-yield
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 informationA guide to investing in cash alternatives
A guide to investing in cash alternatives What you should know before you buy Wells Fargo Advisors wants to help you invest in cash alternative products that are suitable for you based on your investment
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 informationFunds in Court Information Guide INVESTMENT RISKS
Funds in Court Information Guide INVESTMENT RISKS NOTE: The information in this document is for information purposes only. The information is not intended to be and does not constitute financial advice
More informationfor rising interest rates
Fall 1 Documeent title on one or two Positioning lines in Gustan bond Book portfolios pt for rising interest rates Stephen MacDonald, CFA Managing Director Client Portfolio Management Peter Moore Director
More information