The Credit Analysis Process: From In-Depth Company Research to Selecting the Right Instrument

Size: px
Start display at page:

Download "The Credit Analysis Process: From In-Depth Company Research to Selecting the Right Instrument"

Transcription

1 Featured Solution May 2015 Your Global Investment Authority The Credit Analysis Process: From In-Depth Company Research to Selecting the Right Instrument In today s low yield environment, an active investment approach with a focus on picking both the right credit and the right instrument is critical in seeking higher returns. At PIMCO, the credit investment process involves a global team of analysts and portfolio managers collaborating to analyze a company s fundamentals and to select the best instrument to express that view in portfolios. PIMCO has employed this integrated approach to credit investing for over 40 years. Andreas Berndt, CFA Executive Vice President Portfolio Manager Charles Watford Executive Vice President Credit Analyst Two key market characteristics inform our approach to credit analysis. First, credit is an asymmetric asset class where the investor has a high likelihood of earning a risk premium, but on the downside can risk a pronounced loss if the company defaults. For example, in an investment grade portfolio, it could take as many as a hundred performing credits to offset the loss from one default. Therefore, avoiding the losers and taking an active approach in an effort to pick winners in credit portfolios is one of the most significant factors in successful credit management. Second, credit can offer a broad range of investment opportunities: A single company can offer a large range of bonds with different maturities, currencies and positions in the capital structure; investors may also be able to take exposure in credit derivatives (e.g., credit default swaps). These different instruments offer varying levels of compensation, liquidity, risk and performance potential. As a result, the universe of industries, companies and instruments within companies constitutes a large set of opportunities to actively exploit.

2 FIGURE 1: MULTIPLE INVESTMENT PROFESSIONALS LOOKING AT COMPANIES IN EVERY CLIENT PORTFOLIO Lead Portfolio Manager Ultimately responsible for: All buys, sells and position sizes Sector allocations and individual security selection Overall portfolio risk Specialist Portfolio Managers Responsible for determining valuation attractiveness in their respective credits and steering the firmwide holdings into the most attractive opportunities and away from underperformers Determines best way to implement investment view across maturities, currencies and instruments Interacts with brokers to buy and sell positions Credit Analysts Analyzes companies in a sector based on exhaustive independent research Assesses current and forward-looking business model, competitive advantages and financial statements, etc. Responsible for fundamental view and monitoring of names across all accounts across the firm Source: PIMCO Integrated approach Each with unique areas of expertise, PIMCO s credit analysts, specialist portfolio managers and lead portfolio managers work together to actively manage credit portfolios (see Figure 1). Because of the asymmetry of the asset class, PIMCO s team of over 60 global credit analysts undertakes vigorous and independent analysis of each credit in our portfolios to evaluate the potential benefits and downside risks. We determine our own internal credit rating independent of the third party rating agencies. From a relative value perspective, this analysis also allows us to assess cheapness and richness of each credit versus our internal rating. Due to the complexity in determining the right instrument at the right price, PIMCO has specialist portfolio managers who concentrate on selecting and trading the cheapest instrument in their respective credits and help ensure the team s views are implemented in the most effective way. Specialist portfolio managers own the credit book in their respective sectors and recommend trades on a firmwide basis, based on relative value and the credit analysts views. Finally, lead portfolio managers are responsible for deciding whether to include each credit in a particular portfolio along with implementing the appropriate sizing. They are also responsible for allocating among sectors and for the portfolio s overall risk. PIMCO s credit research process Our global analyst team is responsible for independent analysis of company credit positions. We conduct our own stress tests to assess downside risks and anticipate opportunities that could arise from changes in the outlook. Of note, the majority of the time, PIMCO assigns a different rating than the rating agencies, allowing MAY 2015 FEATURED SOLUTION 2

3 portfolios the potential to benefit from investing in credits that we rate as higher and avoiding credits we rate as lower than the agencies do. We also rate deals that are unrated by agencies; this helps us to extract additional spread premium to officially rated credits with similar credit profiles. We believe our ratings frequently diverge from the rating agencies due to a greater emphasis on forward-looking opportunities and risks, more stress testing of company performance and more frequent reviews of companies credit positions, all combined with our macroeconomic views. We put less emphasis on mechanistic rules (for example, automatically notching ratings within the capital structure). Our business model also ensures we work hard to anticipate the markets and the underlying credit trends rather than lagging them. Our research focuses on identifying credits with lower risk on the downside and greater income potential and capital appreciation on the upside. When assessing the downside, we look for companies with a significant safety margin to survive adverse events. For the upside, we look for spread compression and potential for capital appreciation that will come from a rating upgrade especially when taking exposure in credits with the potential to go from high yield to investment grade ( rising stars ). Typically, more than 75% of the overall adjustment of the credit spread takes place ahead of an upgrade or downgrade of a credit by the rating agencies see Figure 2 for one example in which spreads tighten days or weeks in advance of the rating change on Day 0. An investment team with an independent view may be better able to anticipate these moves and harvest the gains. Those who wait for the rating agencies may be too late. Evaluating company fundamentals For each company and security, our analysts focus on four areas: 1) business risk, 2) financial structure, 3) security structure and 4) relative value. (See Figure 3.) FIGURE 2: SPREADS CAN MOVE SIGNIFICANTLY LEADING UP TO A RATING CHANGE Cumulative change in spread ratio to BBBs 10% 5% 0% -5% -10% -15% -20% -25% -30% Days leading up to and beyond upgrade event (Day 0) First upgrade (stays in high yield index) Leaves at least one high yield index Source: Bloomberg, Barclays Research as of October Methodology is spreads of non-financial rising stars versus the Barclays Global Aggregate Credit BBB Index and Spread between non-financial fallen angels and Barclays Global HY BB Index. Barclays indexes use median rating to determine high yield versus investment grade eligibility, while other widely used benchmark indexes use average ratings. This can result in mismatched migration timing when agency ratings are more than one notch apart. A rising star is a formerly speculative grade (high yield) company that has had its debt upgraded to investment grade by a credit rating agency. A fallen angel is a formerly investment grade company whose bond rating has been decreased to speculative grade. Figure is provided for illustrative purposes and is not indicative of the past or future performance of any PIMCO product. For business risk, we assess both the industry characteristics and the company position within that industry. Our assessment of the industry will include a consideration of the growth rates, profit margins, capital requirements and volatility of returns as well as the industry s barriers to entry. The company s competitive position is assessed through its financial performance (both past and future estimations), the sources of its competitive advantage (for example, operating efficiency, scale, patents and regulatory barriers) and its longer-term strategy. In addition, we look to assess the governance of the organization (including the quality and integrity of management and the company accounts) and risks from off-balance-sheet areas such as environmental liabilities and social costs (e.g., restructuring costs). MAY 2015 FEATURED SOLUTION 3

4 FIGURE 3: FOUR KEY AREAS INFORM OVERALL FUNDAMENTAL ANALYSIS Company fundamentals Corporate earnings Industry sales trends Valuations Guidance BUSINESS MODEL FINANCIAL STRUCTURE RELATIVE VALUE Competitive position Corporate strategy Management track record Transparency of financial reports Equity versus debt market financing strategy Cash flow Source of profitability Balance sheet Leverage Financial flexibility Deployment of capital Place in the capital structure of instrument Covenants/legal Off-balance-sheet issues Risk valuation within industry Risk valuation versus ratings category Associated technical and market volatility Trajectory of credit trends versus valuation Valuation of credit across various instrument types Source: PIMCO For financial structure, we analyze a range of ratios specific to each industry, such as leverage, interest coverage, liquidity and off-balance-sheet debt. Our aim is to assess our margin of safety as bondholders. We incorporate PIMCO s top-down global and regional macro views in designing stress tests and compiling financial projections. For the security structure, we assess the position of each investment within the capital structure and the covenants that protect our position in downside scenarios. The analysis, informed by our macro outlook, leads us to our own credit rating. This rating in turn allows us to identify relative value opportunities across sectors and security structures, helping us to identify potential rising stars and falling angels in portfolios. Risk management is a priority at every level. Default and spread widening risk are dominant potential risks in investing in corporate debt securities. Our focus on higher quality corporates, combined with our comprehensive evaluation of credits both at purchase and on an ongoing basis, helps reduce the risk of a downgrade or default in any of our credit holdings. Once the individual credits are assessed, the complexity of the credit market and the variety of instruments require an assessment of the risks and opportunities from a portfolio perspective. PIMCO s proprietary analytical systems and portfolio management tools help us to look at risks across the different instruments and to assess exposure and risk across countries, sectors and single names. MAY 2015 FEATURED SOLUTION 4

5 Careful research and active management yield results To help best position investors to reach their objectives, a credit portfolio management team should take an active approach to credit selection based on proprietary credit views. We believe these views need to be based on thorough credit analysis with a focus on managing and anticipating the downside. Portfolio managers need to select the right instruments at the right time and diversify both risks and opportunities in an effort to harvest the risk premium. These factors are even more important in a world where yields are low and alpha, not beta, may make a crucial contribution to absolute return generation. MAY 2015 FEATURED SOLUTION 5

6 Biographies Mr. Berndt is an executive vice president and portfolio manager in the Munich office, managing euro investment grade credit portfolios. Prior to joining PIMCO in 2000, he worked for BfG Invest in Frankfurt, managing a broad range of fixed income portfolios. He has 20 years of investment experience and holds a master s degree in business from Business School of Banking and Finance in Frankfurt, Germany. He is also a member of the German Association of Investment Professionals (GAIP). Mr. Watford is an executive vice president and credit analyst in the London office, focusing on the European automotive, retail, real estate and whole business securitization sectors. Prior to joining PIMCO in 2007, Mr. Watford was a management consultant at McKinsey & Company and an investment banking analyst at Morgan Stanley. He has 12 years of investment experience and holds an MBA from the Wharton School of the University of Pennsylvania. He also holds a master s degree in chemistry from Oxford. Newport Beach Headquarters 650 Newport Center Drive Newport Beach, CA Amsterdam The margin of safety, for a bond, is the amount that the company earns in excess of interest payments, or the ratio between the total value and total debt of the company. A word about risk: All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investors should consult their investment professional prior to making an investment decision. This material contains the opinions of the author but not necessarily those of PIMCO and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. It is not possible to invest directly in an unmanaged index. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO and YOUR GLOBAL INVESTMENT AUTHORITY are trademarks or registered trademarks of Allianz Asset Management of America L.P. and Pacific Investment Management Company LLC, respectively, in the United States and throughout the world. 2015, PIMCO. Hong Kong London Milan Munich New York Rio de Janeiro Singapore Sydney Tokyo Toronto Zurich PIMCO Investments LLC, distributor, 1633 Broadway, New York, NY, is a company of PIMCO. pimco.com/investments

PROTECTING YOUR PORTFOLIO WITH BONDS

PROTECTING YOUR PORTFOLIO WITH BONDS Your Global Investment Authority PROTECTING YOUR PORTFOLIO WITH BONDS Bond strategies for an evolving market Market uncertainty has left many investors wondering how to protect their portfolios during

More information

Everything You Need to Know About Bonds

Everything You Need to Know About Bonds Everything You Need to Know About Bonds Your Global Investment Authority What is a bond? The bond market is by far the largest securities market in the world, providing investors with virtually limitless

More information

Fixed-income opportunity: Short duration high yield

Fixed-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 information

(expenses that you pay each year as a percentage of the value of your investment)

(expenses that you pay each year as a percentage of the value of your investment) July 31, 2015 SUMMARY PROSPECTUS SAAT Core Market Strategy Allocation Fund (SKTAX) Class A Before you invest, you may want to review the Fund s prospectus, which contains information about the Fund and

More information

Investment Implications for UK DC Schemes in Light of Tax and Regulatory Changes

Investment Implications for UK DC Schemes in Light of Tax and Regulatory Changes Investment Implications for UK DC Schemes in Light of Tax and Regulatory Changes November 19, 2014 by William Allport of PIMCO With greater flexibility and choices available to DC savers in the latter

More information

Understanding Fixed Income

Understanding 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 information

A strategic, multisector approach to fixed-income investing

A 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 information

Global Bond Fund FAQ April 2016

Global Bond Fund FAQ April 2016 April 2016 333 S. Grand Ave., 18th Floor Los Angeles, CA 90071 (213) 633-8200 1. What is the investment objective of the DoubleLine s Global Bond Fund? The DoubleLine Global Bond Fund seeks to generate

More information

Session 18, Tools for Evaluating Insurance Portfolio Investment Performance. Moderator: Peter C. Miller, FSA. Presenter: David L.

Session 18, Tools for Evaluating Insurance Portfolio Investment Performance. Moderator: Peter C. Miller, FSA. Presenter: David L. Session 18, Tools for Evaluating Insurance Portfolio Investment Performance Moderator: Peter C. Miller, FSA Presenter: David L. Braun, FSA Society of Actuaries 2015 Investment Symposium Tools for Evaluating

More information

How do you find income without taking on too much risk?

How do you find income without taking on too much risk? PIMCO Income Fund How do you find income without taking on too much risk? Faced with historically low yields, income-oriented investors may be tempted to take on more risk in pursuit of yield a strategy

More information

CALVERT UNCONSTRAINED BOND FUND A More Expansive Approach to Fixed-Income Investing

CALVERT 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 information

High Yield Bonds A Primer

High Yield Bonds A Primer High Yield Bonds A Primer With our extensive history in the Canadian credit market dating back to the Income Trust period, our portfolio managers believe that there is considerable merit in including select

More information

MainStay VP Janus Balanced Portfolio

MainStay 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 information

Absolute return: The search for positive returns in changing markets

Absolute return: The search for positive returns in changing markets Absolute return: The search for positive returns in changing markets Tuesday, 7 June 2011 Portfolio Manager for Global Fixed Income and Absolute Return Funds www.dbadvisors.com Topics for discussion What

More information

Are Unconstrained Bond Funds a Substitute for Core Bonds?

Are 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 information

Using Derivatives in the Fixed Income Markets

Using Derivatives in the Fixed Income Markets Using Derivatives in the Fixed Income Markets A White Paper by Manning & Napier www.manning-napier.com Unless otherwise noted, all figures are based in USD. 1 Introduction While derivatives may have a

More information

ADVISORSHARES TRUST. AdvisorShares Pacific Asset Enhanced Floating Rate ETF NYSE Arca Ticker: FLRT

ADVISORSHARES TRUST. AdvisorShares Pacific Asset Enhanced Floating Rate ETF NYSE Arca Ticker: FLRT ADVISORSHARES TRUST AdvisorShares Pacific Asset Enhanced Floating Rate ETF NYSE Arca Ticker: FLRT Supplement dated February 26, 2016 to the Summary Prospectus, Prospectus, and Statement of Additional Information

More information

City 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 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 information

BOND. ETF Investment Solutions Series. Issue. Issues Education Solutions April 2012. Your Global Investment Authority

BOND. ETF Investment Solutions Series. Issue. Issues Education Solutions April 2012. Your Global Investment Authority Your Global Investment Authority ETF Investment Solutions Series Issues Education Solutions April 2012 BOND PIMCO ETFs Adding Skill and Breadth to Core Bond Portfolios with PIMCO ETFs Issue The pivotal

More information

High-Yield Spread U.S. 10-Year Treasury Yield Investment Grade Spread

High-Yield Spread U.S. 10-Year Treasury Yield Investment Grade Spread WisdomTree ETFs BOFA MERRILL LYNCH HIGH YIELD BOND ZERO DURATION FUND HYZD The U.S. high-yield bond market has been one of the best-performing subsets of the fixed income investable universe over the past

More information

Mortgage and Asset Backed Securities Investment Strategy

Mortgage and Asset Backed Securities Investment Strategy Mortgage and Asset Backed Securities Investment Strategy Traditional fixed income has enjoyed an environment of falling interest rates over the past 30 years. Average of 10 & 30 Year Treasury Yields (1981

More information

BlackRock 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 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 information

Principal High Yield I Portfolio

Principal High Yield I Portfolio Profile Principal High Yield I Portfolio Sub-advised by J.P. Morgan Asset Management and Neuberger Berman J.P. Morgan Asset Management is one of the largest and most comprehensive investment management

More information

Japanese bonds in a negative interest rate environment

Japanese bonds in a negative interest rate environment Japanese bonds in a negative interest rate environment On January 29, 2016, the Bank of Japan (BoJ) introduced "Quantitative and Qualitative Monetary Easing with Negative Interest Rate". The decision initiated

More information

SACRS Fall Conference 2013

SACRS 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

High Yield Credit: An Evaluation for Prospective Insurance Company Investors

High Yield Credit: An Evaluation for Prospective Insurance Company Investors High Yield Credit: An Evaluation for Prospective Insurance Company Investors Low interest rates challenging traditional insurance company business model More insurance companies using high yield to mitigate

More information

The recent volatility of high-yield bonds: Spreads widen though fundamentals stay strong

The 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 information

Russell Funds Russell Tax Exempt Bond Fund Money Manager and Russell Overview September 2015

Russell Funds Russell Tax Exempt Bond Fund Money Manager and Russell Overview September 2015 Money Manager and Russell Overview September 2015 Russell s investment approach Russell uses a multi-asset approach to investing, combining asset allocation, manager selection and ongoing portfolio management

More information

Capital preservation strategy update

Capital 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 information

PIMCO Foreign Bond Fund (U.S. Dollar- Hedged)

PIMCO 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 information

KDP ASSET MANAGEMENT, INC.

KDP ASSET MANAGEMENT, INC. ASSET MANAGEMENT, INC. High Yield Bond and Senior Secured Bank Loan Outlook October 2015 Asset Management, Inc. 24 Elm Street Montpelier, Vermont 802.223.0440 HighYield@kdpam.com This is an analytical

More information

Balanced Fund RPBAX. T. Rowe Price SUMMARY PROSPECTUS

Balanced 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 information

May 1, 2015 as amended June 1, 2015

May 1, 2015 as amended June 1, 2015 INSTITUTIONAL INVESTOR May 1, 2015 as amended June 1, 2015 DATE TARGET FUNDS MyDestination 2005 Fund MyDestination 2015 Fund MyDestination 2025 Fund MyDestination 2035 Fund MyDestination 2045 Fund MyDestination

More information

FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK

FIXED 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 information

Opportunities in credit higher quality high-yield bonds

Opportunities 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 information

Fixed Income Discussion

Fixed Income Discussion February, 2014 Fixed Income Discussion Greg DeForrest, CFA Senior Vice President Greg Ungerman, CFA Senior Vice President The Problem with Bonds Low return expectations Historic risk exposure may not reflect

More information

NPH Fixed Income Research Update. Bob Downing, CFA. NPH Senior Investment & Due Diligence Analyst

NPH 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 information

Moving Forward With the Normalization of Yields

Moving Forward With the Normalization of Yields Moving Forward With the Normalization of Yields April 8, 2014 by Scott Mather, Michael Story of PIMCO One response to yield normalization is to consider retaining core bonds and diversifying the specific

More information

Is it time to hire a professional to manage your bonds?

Is 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 information

Q&A: High Discipline in High Yield Investing

Q&A: High Discipline in High Yield Investing Q&A: High Discipline in High Yield Investing With a potentially flat-to-rising interest rate environment, high yield investments are coming into greater focus as an attractive option for fixed income investors.

More information

Priority Senior Secured Income Fund, Inc.

Priority 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 information

Mutual Fund Investing Exam Study Guide

Mutual Fund Investing Exam Study Guide Mutual Fund Investing Exam Study Guide This document contains the questions that will be included in the final exam, in the order that they will be asked. When you have studied the course materials, reviewed

More information

Global high yield: We believe it s still offering value December 2013

Global 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 information

Nuveen Tactical Market Opportunities Fund

Nuveen Tactical Market Opportunities Fund Nuveen Tactical Market Opportunities Fund Summary Prospectus January 29, 2016 Ticker: Class A NTMAX, Class C NTMCX, Class I FGTYX This summary prospectus is designed to provide investors with key Fund

More information

Nuveen Intelligent Risk Conservative Allocation Fund will be liquidated after the close of business on June 24, 2016.

Nuveen Intelligent Risk Conservative Allocation Fund will be liquidated after the close of business on June 24, 2016. NUVEEN INTELLIGENT RISK CONSERVATIVE ALLOCATION FUND SUPPLEMENT DATED APRIL 18, 2016 TO THE SUMMARY PROSPECTUS DATED DECEMBER 31, 2015 Nuveen Intelligent Risk Conservative Allocation Fund will be liquidated

More information

FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS

FLOATING 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 information

With interest rates at historically low levels, and the U.S. economy showing continued strength,

With 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 information

Fixed Income Training Seminar Asset Management Experience

Fixed Income Training Seminar Asset Management Experience Asset Management Fixed Income Training Seminar Asset Management Experience Philipp Büchler, Chris Koslowski, Markus Kramer, Manuel Walker Credit Suisse Asset Management Core Fixed Income Group Zurich August

More information

Investment insight. Fixed income the what, when, where, why and how TABLE 1: DIFFERENT TYPES OF FIXED INCOME SECURITIES. What is fixed income?

Investment 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 information

Seeking a More Efficient Fixed Income Portfolio with Asia Bonds

Seeking 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 information

Interest Rates and Inflation: How They Might Affect Managed Futures

Interest Rates and Inflation: How They Might Affect Managed Futures Faced with the prospect of potential declines in both bonds and equities, an allocation to managed futures may serve as an appealing diversifier to traditional strategies. HIGHLIGHTS Managed Futures have

More information

Subordinated bonds at attractive yields

Subordinated bonds at attractive yields INVESTMENT OPPORTUNITY June 2015 For professional investors BY JAN WILLEM DE MOOR, PORTFOLIO MANAGER OF ROBECO FINANCIAL INSTITUTIONS BONDS Subordinated bonds at attractive yields Strong market momentum

More information

FLOATING 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. 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 information

PEI: New Strategies for Risk Management in Private Equity

PEI: New Strategies for Risk Management in Private Equity PEI: New Strategies for Risk Management in Private Equity Risk in non-traditional secondary strategies By Augustin Duhamel and Vidar Bergum, 17Capital Introduction As the private equity industry has matured,

More information

An Alternative to Fixed Rate Bonds

An 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 information

Bonds, in the most generic sense, are issued with three essential components.

Bonds, in the most generic sense, are issued with three essential components. Page 1 of 5 Bond Basics Often considered to be one of the most conservative of all investments, bonds actually provide benefits to both conservative and more aggressive investors alike. The variety of

More information

Impact of QE on Fixed Income

Impact of QE on Fixed Income Impact of QE on Fixed Income David Greene, Client Portfolio Manager Pioneer Investments Unconstrained Approaches Potential returns mean investors have to be more opportunistic 5 0 Expected return based

More information

A case for high-yield bonds

A 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 information

CMG Managed High Yield Bond Program. 2015 CMG Capital Management Group, Inc.

CMG Managed High Yield Bond Program. 2015 CMG Capital Management Group, Inc. CMG Managed High Yield Bond Program About CMG CMG is a Registered Investment Advisor located in King of Prussia, Pennsylvania founded in 1992 by Stephen Blumenthal. Since our inception, CMG has embraced

More information

Long duration bond benchmarks for corporate pension plans

Long duration bond benchmarks for corporate pension plans By: Yoshie Phillips, CFA, Senior Research Analyst OCTOBER 2011 Long duration bond benchmarks for corporate pension plans Issue: With the growth of liability-driven investing (LDI), many corporate pension

More information

Munis: Still Delivering in Tough Conditions? July 2014

Munis: 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 information

Seix Total Return Bond Fund

Seix 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 information

Investor Guide to Bonds

Investor Guide to Bonds Investor Guide Investor Guide to Bonds threadneedle.com Introduction Why invest in bonds? Although your capital is normally considered safe in a traditional deposit account, low interest rates have eroded

More information

Glossary of Investment Terms

Glossary of Investment Terms online report consulting group Glossary of Investment Terms glossary of terms actively managed investment Relies on the expertise of a portfolio manager to choose the investment s holdings in an attempt

More information

SHARES NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE. BKLN PowerShares Senior Loan Portfolio

SHARES 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 information

March Madness: It s Time to Rethink the Short-Term Approach to Market Upsets

March Madness: It s Time to Rethink the Short-Term Approach to Market Upsets Featured Solution March 2014 Your Global Investment Authority March Madness: It s Time to Rethink the Short-Term Approach to Market Upsets Jerome M. Schneider Managing Director Head of Short-Term and Funding

More information

Asset Liability Management and Investment Seminar May 2012. Session1: Asset Allocation for Insurance Company Liability Driven Investment.

Asset Liability Management and Investment Seminar May 2012. Session1: Asset Allocation for Insurance Company Liability Driven Investment. Asset Liability and Investment Seminar May 2012 Session1: Asset Allocation for Insurance Company Liability Driven Investment Genghui Wu Asset Liability Liability Driven Investment Genghui Wu FSA, CFA,

More information

Why high-yield municipal bonds may be attractive in today s market environment

Why 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 information

Market Making for Exchange Traded Funds. Corporates & Markets

Market Making for Exchange Traded Funds. Corporates & Markets Market Making for Exchange Traded Funds Corporates & Markets Commerzbank your trusted partner in the ETF market Since the start of the new millennium, exchange traded funds (ETFs) have experienced phenomenal

More information

City National Rochdale Municipal High Income Fund a series of City National Rochdale Funds

City National Rochdale Municipal High Income Fund a series of City National Rochdale Funds City National Rochdale Municipal High Income Fund a series of City National Rochdale Funds SUMMARY PROSPECTUS DATED JANUARY 31, 2016 Class: Servicing Class Class N Ticker: (CNRMX) (CNRNX) Before you invest,

More information

Holding the middle ground with convertible securities

Holding 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 information

Emerging Markets Bond Fund Emerging Markets Corporate Bond Fund Emerging Markets Local Currency Bond Fund International Bond Fund

Emerging 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 information

Closed-end fund update

Closed-end fund update a b Closed-end fund update Senior loan funds: Too early to Buy UBS Wealth Management Research / 29 May 2008 Lead Analyst Sangeeta Marfatia Highlights We provide an update on the senior loan funds in this

More information

INSURANCE RATING METHODOLOGY

INSURANCE RATING METHODOLOGY INSURANCE RATING METHODOLOGY The primary function of PACRA is to evaluate the capacity and willingness of an entity / issuer to honor its financial obligations. Our ratings reflect an independent, professional

More information

Fixed Income Update Portfolio Positioning

Fixed Income Update Portfolio Positioning Fixed Income Update Portfolio Positioning April 2015 In 2014, we saw traditional relationships between equity and high yield performance diverge. Despite an improving U.S. economy Treasuries rallied along

More information

Yield Curve September 2004

Yield Curve September 2004 Yield Curve Basics The yield curve, a graph that depicts the relationship between bond yields and maturities, is an important tool in fixed-income investing. Investors use the yield curve as a reference

More information

Strategic Focus: High Dividend Stock Strategy

Strategic Focus: High Dividend Stock Strategy Strategic Focus: High Dividend Stock Strategy September 2011 333 South Grand Avenue, Los Angeles, CA 90071 WHY ARE HIGH DIVIDEND STOCKS APPEALING? I Support from Robust Corporate Profits and Improving

More information

Introduction to Convertible Debentures

Introduction 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 information

A case for high-yield bonds

A 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 information

Changes to the OklahomaDream 529 Plan

Changes to the OklahomaDream 529 Plan Supplement dated December 31, 2015 to Oklahoma Dream Advisor Sold 529 Program Plan Disclosure Statement for Investors Using a Financial Advisor (Classes A and C) Dated November 3, 2014 This Supplement

More information

BRINKER CAPITAL OVERVIEW. Helping You Invest with Confidence

BRINKER CAPITAL OVERVIEW. Helping You Invest with Confidence BRINKER CAPITAL OVERVIEW Helping You Invest with Confidence PARTIALLY INVESTED PERIODIC INVESTMENT FULLY INVESTED Unwavering Focus on Investment Excellence For more than 25 years, Brinker Capital has been

More information

Investing in Debt Funds

Investing in Debt Funds 10 February, 2012 Investing in Debt Funds Debt securities (bonds) are a fundamental part of an investing plan for most investors. There are many types of bonds along with varied approaches to debt fund

More information

Fundamentals Level Skills Module, Paper F9

Fundamentals Level Skills Module, Paper F9 Answers Fundamentals Level Skills Module, Paper F9 Financial Management December 2008 Answers 1 (a) Rights issue price = 2 5 x 0 8 = $2 00 per share Theoretical ex rights price = ((2 50 x 4) + (1 x 2 00)/5=$2

More information

A. M. Best Company & The Rating Process

A. M. Best Company & The Rating Process A. M. Best Company & The Rating Process Raymond J. Thomson, ARe, ARM Senior Financial Analyst, Property/Casualty Ratings Oldwick NJ Disclaimer AM Best Company (AMB) and/or its licensors and affiliates.

More information

Market Linked Certificates of Deposit

Market Linked Certificates of Deposit Market Linked Certificates of Deposit This material was prepared by Wells Fargo Securities, LLC, a registered brokerdealer and separate non-bank affiliate of Wells Fargo & Company. This material is not

More information

PERFORMING DUE DILIGENCE ON NONTRADITIONAL BOND FUNDS. by Mark Bentley, Executive Vice President, BTS Asset Management, Inc.

PERFORMING DUE DILIGENCE ON NONTRADITIONAL BOND FUNDS. by Mark Bentley, Executive Vice President, BTS Asset Management, Inc. PERFORMING DUE DILIGENCE ON NONTRADITIONAL BOND FUNDS by Mark Bentley, Executive Vice President, BTS Asset Management, Inc. Investors considering allocations to funds in Morningstar s Nontraditional Bond

More information

Target Date Funds: Debating To Versus Through

Target Date Funds: Debating To Versus Through Target Date Funds: Debating To Versus Through Glenn Dial, Sr. VP, Head of Retirement Product Business Development, Allianz Global Investors Distributors LLC Scott Brooks, Head of US Retail Client Relations

More information

Low-Volatility Investing for Retirement

Low-Volatility Investing for Retirement Low-Volatility Investing for Retirement MODERATOR Robert Laura President SYNERGOS Financial Group PANELISTS Frank Barbera Executive VP & Co-Portfolio Manager Company Paul Frank Lead Portfolio Manager Stadion

More information

The Bond Fund of America

The Bond Fund of America The Bond Fund of America Summary prospectus March 1, 2015 Class A B C F-1 F-2 529-A 529-B 529-C 529-E ABNDX BFABX BFACX BFAFX ABNFX CFAAX CFABX CFACX CFAEX 529-F-1 R-1 R-2 R-2E R-3 R-4 R-5 R-6 CFAFX RBFAX

More information

Non-Government-Guaranteed Bonds in the Petroleum Fund - NBIM

Non-Government-Guaranteed Bonds in the Petroleum Fund - NBIM Page 1 of 7 Non-Government-Guaranteed Bonds in the Petroleum Fund From 2002, the Government Petroleum Fund will be investing a large portion of the portfolio in non-government bonds. The benchmark index

More information

Spectrum Insights. Time to float. Why invest in corporate bonds? - Value

Spectrum Insights. Time to float. Why invest in corporate bonds? - Value Spectrum Insights Damien Wood, Principal JUNE 25, 2015 Time to float Investing in floating rate bonds as opposed to fixed rate bonds helps protect bond investors from price slumps. Spectrum expects that

More information

INVESTMENT OBJECTIVE The Fund s investment objective is to generate current income consistent with preservation of capital.

INVESTMENT OBJECTIVE The Fund s investment objective is to generate current income consistent with preservation of capital. SUMMARY PROSPECTUS January 31, 2013 AllianceBernstein Global Bond Fund Ticker: Class A ANAGX; Class B ANABX; Class C ANACX; Advisor Class ANAYX; Class R ANARX; Class K ANAKX; Class I ANAIX Before you invest,

More information

Impact of rising interest rates on preferred securities

Impact 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 information

Unconstrained fixed income may offer a compelling solution for today s bond market challenges

Unconstrained fixed income may offer a compelling solution for today s bond market challenges INVESTMENT OPPORTUNITIES The market direction and your portfolio Unconstrained fixed income may offer a compelling solution for today s bond market challenges Why now? n Elevated risks and prolonged dismal

More information

I.A.M. National 401(k) Plan. Investment Options Summary

I.A.M. National 401(k) Plan. Investment Options Summary I.A.M. National 401(k) Plan Investment Options Summary The I.A.M. National 401(k) Plan offers a diverse investment lineup to meet the varied needs of our participants. The lineup includes 12 Retirement

More information

RUTGERS POLICY. Revisions: 7/1/2013; 10/10/2013 (Updated title); 9/3/2014 (Changes in roles and investment portfolio definitions)

RUTGERS POLICY. Revisions: 7/1/2013; 10/10/2013 (Updated title); 9/3/2014 (Changes in roles and investment portfolio definitions) RUTGERS POLICY Section: 40.2.19 Section Title: Fiscal Management Policy Name: Investment Policy for the Short Term Investments Formerly Book: N/A Approval Authority: Senior Vice President for Finance and

More information

Retirement Balanced Fund

Retirement Balanced Fund SUMMARY PROSPECTUS TRRIX October 1, 2015 T. Rowe Price Retirement Balanced Fund A fund designed for retired investors seeking capital growth and income through investments in a combination of T. Rowe Price

More information

Trends in Institutional Investor Use of Fixed Income ETFs. Presenter: ANDREW MCCOLLUM Partner & Managing Director Greenwich Associates

Trends in Institutional Investor Use of Fixed Income ETFs. Presenter: ANDREW MCCOLLUM Partner & Managing Director Greenwich Associates Trends in Institutional Investor Use of Fixed Income ETFs Presenter: ANDREW MCCOLLUM Partner & Managing Director Table of Contents Role in Institutional Portfolios Drivers of Growth Institutional Fixed-Income

More information

CAMPUS CAREERS INVESTMENT GROUPS BUILD STRATEGIES

CAMPUS CAREERS INVESTMENT GROUPS BUILD STRATEGIES ABOUT BlackRock was founded 27 years ago by eight entrepreneurs who wanted to start a very different company. One that combined the best of a financial leader and a technology pioneer. And one that focused

More information

Overcoming the Limitations in Traditional Fixed Income Benchmarks

Overcoming the Limitations in Traditional Fixed Income Benchmarks Title: Author: Overcoming the Limitations in Traditional Fixed Income Benchmarks Clive Smith Portfolio Manager Date: October 2011 Synopsis: The last decade has seen material shifts in the composition of

More information