Navigating Rising Rates with Active, Multi-Sector Fixed Income Management

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Navigating Rising Rates with Active, Multi-Sector Fixed Income Management"

Transcription

1 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 rate risk. Should they take a passive, index-based, less-diversified approach or look to a more active, multi-sector, dynamic strategy? We believe today s bond market and yield environment favors a flexible, actively-managed, value-driven, multisector approach to fixed income investing. This type of approach can invest in a much larger opportunity set within the fixed income universe, including floating rate sectors, municipal bonds, insurance-linked securities, convertible bonds, select non-investment grade securities, and non-u.s. bonds. As a result, it can deliver better risk-adjusted returns than an index-based strategy that is heavily weighted towards government bonds, such as the Barclays U.S. Aggregate Bond Index. While fixed income indices may be appropriate as benchmarks, we believe they are less desirable as investment strategies especially in a rising rate environment. U.S. Treasuries, the most rate-sensitive asset class, represent over % of the market value of the Barclays U.S. Aggregate Bond Index. An additional 8% of the Index is held in agency mortgage-backed securities. With their U.S. government-guarantees, they offer only modest spreads to mitigate rate risk, but are also negatively convex, which hurts performance in rising rate environments. An index-like portfolio may not have sufficient diversification * to avoid losses when interest rates rise. The high rate sensitivity of the component parts of the Index is exacerbated by its higher duration. Over the past year, the Index exhibited its highest duration level, and together with near record-low yields, had the greatest downside exposure to rising interest rates relative to its thirty-year history. Barclays U.S. Aggregate Bond Index: Duration and Yield History Duration (Years) Yield (%) Barclays Aggregate Duration Barclays Aggregate Yield-to-Worst Source: Barclays, Pioneer Investments. Quarterly, last data point 6//. * Diversification does not assure a proft or protect against a loss.

2 The current downside risk of the Barclays U.S. Aggregate Bond Index is depicted below, relative to five and ten years ago. Rising Rates Pose Greater Risk to Investors than in Past Periods Interest Rates Rising % Total Return * Duration (years) Yield (%) One Year One Day -Year // % -4.% -Year // % -4.6% Current 6// % -.6% Source: Barclays and Pioneer Investments as of 6// *Assumes no change in spread, and assumes yield earned equals beginning yield to worst. Returns reflect benefit of roll down. Active multi-sector management can offer higher income and mitigate interest rate risk by investing in fixed income sectors less correlated with interest rates. Unlike indexed managers, active multi-sector managers have the ability to construct portfolios with a view to absolute as well as relative risk. They consider the interactions and correlations of all risk factors, including interest rate, credit, country, sector, industry, and issuer in building portfolios rather than passively accepting the increasingly risky profile of the Index. As the allocation charts below indicate, the Pioneer Opportunistic Core strategy reflects dynamic allocations across a broad range of fixed income asset classes, compared to the less diversified and more static allocation of the Barclays U.S. Aggregate Bond Index. Pioneer Opportunistic Core Strategy: Historical Allocation % 9% 8% 7% 6% % 4% % % % % U.S. High Yield* Emerging Markets Cash Treasury Agency Mortgage- - Backed Securities Jul- Dec- May-4 Oct-4 Mar- Aug- Jan-6 Jun-6 Nov-6 Apr-7 Sep-7 Feb-8 Jul-8 Dec-8 May-9 Oct-9 Mar- Aug- Jan- Jun- Nov- Apr- Municipals Non-Agency Mortgage Backed Securities - Asset-Backed Securities Commercial Mortgage Backed Securities - U.S. Investment Grade Bank Loans International Investment Grade Convertible Securities Sep- Feb- Jul- Dec- May-4 Oct-4 Mar- Jun- % 7% % % % % 7% 4% 6% % 9% % Source: Pioneer Investments as of 6//. The strategy is actively managed; sector allocations will vary over other periods and do not reflect a commitment to an investment policy or sector. The characteristics are of the representative account in the composite. *Includes Event-Linked Bonds (%), International High Yield (%) and Preferred Stock (%).

3 Barclays U.S. Aggregate Bond Index: Historical Allocation % 9% 8% Treasuries 6.% 7% 6% Agencies 4.9% % 4% % Agency MBS 8.% % 9.8% Investment Grade Corporate % Yankees 9.% % ABS/CMBS.9% 6 9 Source: Barclays. As of 6//. In rising interest rate environments, Pioneer uses a number of levers to mitigate rate risk, and is positioned as follows, as of June, : Higher yield:.% gross yield-to-maturity is higher than the Barclays U.S. Aggregate Bond Index of.9%. Yield can help offset principal loss from rising rates. Pioneer seeks to achieve this higher yield by having greater exposure to spread sectors and underweighting government sectors. Underweight to most rate-sensitive assets: U.S. Treasuries comprise 7% of the Pioneer Opportunistic Core portfolio vs. 6% in the Barclays U.S. Aggregate Bond Index. Floating rate exposure: Approximately 7%, includes allocations to Bank Loans, Non-Agency Asset-backed Securities (Home Equity Loans), and Event-Linked (Catastrophe) Bonds. Overweight to credit: Up to % (currently %) diversified non-investment grade exposure. High yield has averaged.% interest rate sensitivity over time, compared to U.S. Treasuries. Interest rate factor positioning: Duration of 4.4 years vs..6 years for the Index, barbelled yield curve positioning, and up to % non-u.s. exposure (currently %) should reduce exposure to rising rates in the U.S. Investors, particularly those with short time horizons and a low tolerance for risk, have the choice in a rising rate environment to simply invest in cash at almost zero yields. Large institutional investors may even have to pay for that privilege. They could invest in cash or in a short duration product. But does it make sense, with a - year yield curve steep relative to long term averages, to forego yield by going short, particularly given the increased probability for a more gradual rise in rates? We believe an attractive solution for fixed income investors in a rising rate environment, but just as importantly over the longer term, is to invest in an intermediate strategy that can add value through dynamic allocation and security selection. This strategy can diversify risk across a broad range of fixed income asset classes when the market compensates for those risks, and can reduce risk exposure when the market does not pay for those risks.

4 As illustrated below, the Pioneer Opportunistic Core strategy has a proven record of outperformance in rising interest rate environments, relative to both the Index and to the median manager. Pioneer Opportunistic Core in a Rising Rate Environment Federal Reserve raised rates by 4.% over two years Annualized Returns May, 4 June, 6 : The -Year Treasury rose from.7% to.% January December Barclays U.S. Aggregate Median U.S. Core Bond Manager Pioneer Opportunistic Core Barclays U.S. Aggregate Median U.S. Core Bond Manager Pioneer Opportunistic Core Rank: 7% % % - Rank: 8% % % Source: Pioneer Investments, Bloomberg and evestment, based on gross composite returns. The evestment U.S. Core Fixed Income universe is comprised of 46 and 9 managers for the May, 4-June, 6 and January -December time periods, respectively. Performance shown is past performance, which is no guarantee of future results. Outperforming When Rates Fall Even if rates do not rise, but fall, the Pioneer Opportunistic Core strategy demonstrated in 4 that its diversified investment approach can still deliver outperformance of its Index and peers, despite holding a relative short duration position. The strategy returned 6.7% in 4 compared to the Index return of.97%, ranking it in the top % of its peers. Indeed, the strategy has demonstrated long-term outperformance of the Index and of its universe over different interest rate, economic, and credit environments, using its dynamic and diversified approach. 4

5 As the following tables demonstrate, the Pioneer Opportunistic Core strategy has achieved attractive returns versus its peers and the Barclays U.S. Aggregate Bond Index. Core Universe Annualized Returns/Rank (%) -year return Rank -year return Rank -year return Rank Pioneer Opportunistic Core Composite Barclays U.S. Aggregate Bond Index Universe Median Core Plus Universe Annualized Returns/Rank (%) -year return Rank -year return Rank -year return Rank Pioneer Opportunistic Core Composite Barclays U.S. Aggregate Bond Index Universe Median The Pioneer Opportunistic Core strategy has achieved these returns with generally lower volatility than its peers and with volatility similar to the Barclays U.S. Aggregate Bond Index. This focus on risk and return has enabled the Pioneer Opportunistic Core strategy to deliver top decile Sharpe ratios over all annualized time periods relative to its peers. Core Universe Standard Deviation Sharpe Ratio -year -year -year -year -year -year Pioneer Opportunistic Core Composite Barclays U.S. Aggregate Bond Index Universe Median Pioneer Opportunistic Core % Rank Core Plus Universe Standard Deviation Sharpe Ratio -year -year -year -year -year -year Pioneer Opportunistic Core Composite Barclays U.S. Aggregate Bond Index Universe Median Pioneer Opportunistic Core % Rank Source: evestment, June,. Based on composite gross returns. Performance shown is past performance, which is no guarantee of future results. Core Universe: Number of managers in universe for -, - and -year: 9, 4 and 9, respectively. Core Plus Universe: Number of managers in universe for -, - and -year: 7, and 6, respectively.

6 Diversification does not guarantee a profit or protect against a loss. The views expressed are those of Pioneer Investments and are current through the date on the first page. These views are subject to change at any time based on market or other conditions, and Pioneer Investments disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Pioneer strategies are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Pioneer strategy or portfolio. The strategy is actively managed; sector allocations will vary over other periods and do not reflect a commitment to an investment policy or sector. Characteristics are of the representative account in the composite. Pioneer Investments ( the Firm ) has prepared and presented this report in compliance with the Global Investment Performance Standards ( GIPS ). GIPS report is available upon request. For the purpose of GIPS Compliance, since January,, the Firm is defined as Pioneer Investment Management, Inc., Pioneer Institutional Asset Management, Inc. and Pioneer Investment Management, Ltd. ( Pioneer Investments ). Pioneer Investments primarily provides investment management and advisory services to mutual fund sponsors, corporations, Public and Taft-Hartley retirement plans, government entities, charitable institutions and insurance companies. Between January, 7 and December, 9, the Firm was defined as Pioneer Investment Management, Inc., Pioneer Asset Management SGRpA, Pioneer Investment Management, Ltd, and Pioneer Investments KAG, all wholly owned subsidiaries of Pioneer Global Asset Management SpA., and Pioneer Pekao Investment Management S.A which is jointly owned by Pioneer Global Asset Management SpA. and Bank Pekao S.A. Between January, and December, 6, the Firm was defined as Pioneer Investment Management, Inc., Pioneer Asset Management SGRpA and Pioneer Investment Management, Ltd, all wholly-owned subsidiaries of Pioneer Global Asset Management SpA., and Pioneer Pekao Investment Management S.A which is jointly owned by Pioneer Global Asset Management SpA. and Bank Pekao S.A. Between July, and December, 4, the Firm was defined as Pioneer Investment Management, Inc., Pioneer Asset Management SGRpA and Pioneer Investment Management, Ltd, all wholly-owned subsidiaries of Pioneer Global Asset Management SpA. Prior to July,, Pioneer Investment Management, Inc. was defined as a separate firm and Pioneer Asset Management SGRpA and Pioneer Investment Management, Ltd were defined as a separate firm. Firm assets on this report represent the combined assets of Pioneer Investment Management, Inc., Pioneer Asset Management SGRpA and Pioneer Investment Management, Ltd. Performance information presented for the periods from January, through June, has not been examined by Deloitte & Touche LLP. Composite dispersion measures represent the consistency of a firm s composite performance results with respect to the individual portfolio returns within a composite. Pioneer utilizes an asset-weighted standard deviation calculation to measure dispersion. Only portfolios that have been included in the composite for a full calendar year are included in the dispersion calculation. This calculation is not considered meaningful if there are not at least two or more portfolios that have been managed within the composite style for a full year. As of September, the U.S. Opportunistic Core Fixed Income Composite has been renamed the Opportunistic Core Fixed Income Composite. This composite was created on January 99, but did not become a GIPS composite until July. Pioneer Investments has been managing assets in this style since October 978. Portfolios are included in the composite in the first full calendar month under management and when the portfolio assets meet the minimum threshold requirements for the composite strategy, as described above, at the beginning of the month. Portfolios are excluded from the composite at the completion of the last full calendar month under management or when assets fall below the minimum threshold. All returns are calculated using the daily valuation methodology. The U.S. mutual funds returns are calculated net of fees and the most recent pro-rated annual expense ratio is added back to create a gross of fee return. Institutional accounts are gross of fee returns with pro-rated management fee subtracted to create net of fee returns. Offshore Accounts are calculated net of fees and the actual monthly expense ratio is added back to create gross of fee return. The performance of the Composite is expressed in U.S. dollars. The calculated net of fee returns provided in this fact sheet are supplemental and reflect the net institutional fee based on the standard annual investment management fee schedule for institutional separate accounts. The calculated net of fee returns reflected in the GIPS report is based on an asset-weighted calculation. A complete list of firm composites and descriptions, along with additional information regarding policies for calculating and reporting returns are available upon request. Pioneer Opportunistic Core ( the Strategy ) seeks total return by investing primarily in investment grade debt securities including corporate, U.S. Treasury, mortgage and agency obligations and up to % in high yield securities. The strategy strives to maintain a yield premium through sector allocation, security selection and tight control over portfolio duration. Risk control measures include diversification across sectors and holdings, a value orientation, and a well-defined buy and sell discipline. The current benchmark is the Barclays U.S. Aggregate Bond Index. Please note that on //, the primary comparative benchmark for this Strategy was revised from the Lehman Government Credit Index to the Lehman Aggregate Bond Index (now the Barclays Capital US Aggregate Bond Index) in an effort to make the benchmark of the composite more consistent with the benchmark designated in the guidelines of the constituent portfolios. The Barclays U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis Additional information regarding the Firm s policies for calculating and reporting returns is available upon request. Pioneer Investments may use leverage, derivatives and invest in certain markets outside of those represented in the benchmark but these practices are not a significant part of the investment strategy. A complete list and description of the firm s composites is available upon request. The minimum threshold for inclusion in this composite is,, USD. Performance information presented for the periods from January, through June, has not been examined by Deloitte & Touche. Data subsequent to December has not yet been verified by an independent, third-party. Performance shown is past performance, which is no guarantee of future results. Pioneer Institutional Asset Management, Inc., 6 State Street, Boston, Massachusetts Pioneer Investments us.pioneerinvestments.com/institutional

Navigating Rising Rates with Active, Multi-Sector Fixed Income Management

Navigating Rising Rates with Active, Multi-Sector Fixed Income Management Navigating Rising Rates with Active, Multi-Sector Fixed Income Management 2 With bond yields near 60-year lows and expected to rise, U.S. core bond investors are increasingly questioning how to mitigate

More information

The Case for Active Management in the Large Cap Growth Equity Universe

The Case for Active Management in the Large Cap Growth Equity Universe The Case for Active Management in the Large Cap Growth Equity Universe Pioneer US Concentrated Growth Strategy This case for active management examines risk-adjusted returns among large cap growth managers

More information

The Risk of Fixed Income Indexing vs. Active Multi-Sector Management

The Risk of Fixed Income Indexing vs. Active Multi-Sector Management Pioneer Perspectives TM May 2012 The Risk of Fixed Income Indexing vs. Active Multi-Sector Management A Different Future for Fixed Income Investors? Tepid economic growth coupled with volatile equity markets

More information

Hillswick Asset Management, LLC Core Fixed Income Composite

Hillswick Asset Management, LLC Core Fixed Income Composite Year End (Millions) USD (Millions) Assets Number of Accounts Hillswick Asset Management, LLC Core Fixed Income Gross Aggregate Gov't/Credit Dispersion Barclays Capital Aggregate Gov't/Credit 2014 1,372

More information

Fixed Income Liquidity in a Rising Rate Environment

Fixed 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 information

Fixed Income 2015 Update. Kathy Jones, Senior Vice President Chief Fixed Income Strategist, Schwab Center for Financial Research

Fixed Income 2015 Update. Kathy Jones, Senior Vice President Chief Fixed Income Strategist, Schwab Center for Financial Research Fixed Income 2015 Update Kathy Jones, Senior Vice President Chief Fixed Income Strategist, Schwab Center for Financial Research 1 Fed: Slow and Low 2015 Fixed Income Outlook 2 Yield Curve Flattening 3

More information

Navigator Fixed Income Total Return

Navigator Fixed Income Total Return CCM-15-12-1 As of 12/31/2015 Navigator Fixed Income Navigate Fixed Income with a Tactical Approach With yields hovering at historic lows, bond portfolios could decline if interest rates rise. But income

More information

Navigator Fixed Income Total Return

Navigator Fixed Income Total Return CCM-15-08-1 As of 8/31/2015 Navigator Fixed Income Total Return Navigate Fixed Income with a Tactical Approach With yields hovering at historic lows, bond portfolios could decline if interest rates rise.

More information

SSgA CAPITAL INSIGHTS

SSgA CAPITAL INSIGHTS SSgA CAPITAL INSIGHTS viewpoints Part of State Street s Vision thought leadership series A Stratified Sampling Approach to Generating Fixed Income Beta PHOTO by Mathias Marta Senior Investment Manager,

More information

Why Consider Bank Loan Investing?

Why Consider Bank Loan Investing? Why Consider Bank Loan Investing? September 2012 Bank loans continue to increase in popularity among a variety of investors in search of higher yield potential than other types of bonds, with lower relative

More 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

High Yield Fixed Income Credit Outlook

High Yield Fixed Income Credit Outlook High Yield Fixed Income Credit Outlook Brendan White, CFA Portfolio Manager, Touchstone High Yield Fund Fort Washington Investment Advisors, Inc. September 28, 2011 The opinions expressed are current as

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

Quarterly Asset Class Report Institutional Fixed Income

Quarterly 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 information

Fixed Income Investing: What s an Investor to Do?

Fixed Income Investing: What s an Investor to Do? INSIGHTS Fixed Income Investing: What s an Investor to Do? July 2012 203.621.1700 2012, Rocaton Investment Advisors, LLC Executive Summary As interest rates have fallen steadily over the past 20 years,

More information

COMMUNITY FOUNDATION OF GREATER MEMPHIS, INC. INVESTMENT GUIDELINES FOR MONEY MARKET POOL

COMMUNITY FOUNDATION OF GREATER MEMPHIS, INC. INVESTMENT GUIDELINES FOR MONEY MARKET POOL INVESTMENT GUIDELINES FOR MONEY MARKET POOL discretionary Money Market Pool is expected to pursue their stated investment strategy and follow the investment guidelines and objectives set forth herein.

More information

Time to Invest in Short-Term Bonds?

Time to Invest in Short-Term Bonds? First Quarter 2010 Time to Invest in Short-Term Bonds? Executive Summary This paper outlines why now may be an opportune time to invest in short-term bonds. We believe short-term bonds offer: Less downside

More information

Investment Funds Description

Investment Funds Description Investment Funds Description As of January 1, 2016 (Containing performance and other information as of December 31, 2015 unless otherwise noted) Short Term Investment Fund Stable Value Fund Inflation Protection

More information

The Coming Volatility

The Coming Volatility The Coming Volatility Lowell Bolken, CFA Vice President and Portfolio Manager Real estate Securities June 18, 2015 www.advantuscapital.com S&P 500 Percent Daily Change in Price September 2008 to April

More information

Essentials of Fixed Income

Essentials of Fixed Income Essentials of Fixed Income State Universities Retirement System April 2010 (This page left blank intentionally) Benefits of Fixed Income Main reasons to invest in fixed income: Diversification Return potential

More information

Redefining Risk in Fixed Income

Redefining 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 information

The Pinnacle Funds. Simplified Prospectus. December 11, 2009 Class A and Class F units and Class I units where noted. Money Market Fund.

The Pinnacle Funds. Simplified Prospectus. December 11, 2009 Class A and Class F units and Class I units where noted. Money Market Fund. The Pinnacle Funds Simplified Prospectus December 11, 2009 Class A and Class F units and Class I units where noted Money Market Fund Pinnacle Short Term Income Fund Bond Funds Pinnacle Income Fund Pinnacle

More information

A GUIDE TO FLOATING RATE BANK LOANS:

A 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 information

An actively managed approach for today s fixed-income markets

An actively managed approach for today s fixed-income markets Q3 2015 Putnam multi-sector fixed-income funds An actively managed approach for today s fixed-income markets D. William Kohli Michael V. Salm Paul D. Scanlon, CFA Putnam s three Co-Heads of Fixed each

More information

Pioneer Bond Fund. Performance Analysis & Commentary September 2015. Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments.

Pioneer Bond Fund. Performance Analysis & Commentary September 2015. Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments. Pioneer Bond Fund COMMENTARY Performance Analysis & Commentary September 2015 Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments.com Third Quarter Review Pioneer Bond Fund s Class

More information

Overview. October 2013. Investment Portfolios & Products. Approved for public distribution. Investment Advisory Services

Overview. October 2013. Investment Portfolios & Products. Approved for public distribution. Investment Advisory Services Equity Risk Management Strategy Overview Approved for public distribution October 2013 Services Portfolios & Products Equity Risk Management Strategy* Tactical allocation strategy that seeks to adjust

More information

Pricing and Strategy for Muni BMA Swaps

Pricing and Strategy for Muni BMA Swaps J.P. Morgan Management Municipal Strategy Note BMA Basis Swaps: Can be used to trade the relative value of Libor against short maturity tax exempt bonds. Imply future tax rates and can be used to take

More information

Unconstrained Fixed Income: One Asset Manager s Perspective HIMCO Webinar

Unconstrained Fixed Income: One Asset Manager s Perspective HIMCO Webinar Unconstrained Fixed Income: One Asset Manager s Perspective HIMCO Webinar October 1, 2014 14-0408 Unconstrained Fixed Income: One Asset Manager s Perspective Presenters Christopher Zeppieri, CFA Vice President

More information

HIGH QUALITY PREMIER OUR PHILOSOPHY THE ATTRIBUTES OUR APPROACH

HIGH QUALITY PREMIER OUR PHILOSOPHY THE ATTRIBUTES OUR APPROACH HIGH QUALITY PREMIER September 30, 2015 (3Q) FACT SHEET OUR PHILOSOPHY We believe that securities with stable and predictable cash flows, and low credit and event risk produce consistent returns while

More information

LifePath Index 2060 Fund Q

LifePath Index 2060 Fund Q Release Date: 9-3-215 LifePath Index 26 Fund Q Standard & Poor's 5 Index LifePath Index 26 Custom Target Date 251+... Allocation of Stocks and Bonds 1 8 6 4 2 45 4 35 3 25 2 15 1 5 Years Until Retirement

More information

Bond Snapshot with Kathy Jones The Year of the Taper

Bond Snapshot with Kathy Jones The Year of the Taper Bond Snapshot with Kathy Jones The Year of the Taper Kathy Jones, Vice President Fixed Income Strategist Schwab Center for Financial Research February 2014 Overview of Topics Tapering Implications Where

More information

INSTITUTIONAL INVESTMENT & FIDUCIARY SERVICES: Building a Better Portfolio: The Case for High Yield Bonds

INSTITUTIONAL 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 information

Diversify your global asset allocation approach by focusing on income and income growth.

Diversify your global asset allocation approach by focusing on income and income growth. Diversify your global asset allocation approach by focusing on income and income growth. Institutional investors have embraced global asset allocation (GAA) strategies as a way to pursue returns with low

More information

Today s bond market is riskier and more volatile than in several generations. As

Today s bond market is riskier and more volatile than in several generations. As Fixed Income Approach 2014 Volume 1 Executive Summary Today s bond market is riskier and more volatile than in several generations. As interest rates rise so does the anxiety of fixed income investors

More information

Benchmarking Real Estate Performance Considerations and Implications

Benchmarking Real Estate Performance Considerations and Implications Benchmarking Real Estate Performance Considerations and Implications By Frank L. Blaschka Principal, The Townsend Group The real estate asset class has difficulties in developing and applying benchmarks

More information

MLC Investment Management. Constructing Fixed Income Portfolios in a Low Interest Rate Environment. August 2010

MLC Investment Management. Constructing Fixed Income Portfolios in a Low Interest Rate Environment. August 2010 Constructing Fixed Income Portfolios in a Low Interest Rate Environment August 2010 Stuart Piper Portfolio Manager MLC Investment Management For Adviser Use Only 1 Important Information: This Information

More information

Designing 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 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 information

HIGH DIVIDEND STOCKS IN RISING INTEREST RATE ENVIRONMENTS. September 2015

HIGH DIVIDEND STOCKS IN RISING INTEREST RATE ENVIRONMENTS. September 2015 HIGH DIVIDEND STOCKS IN RISING INTEREST RATE ENVIRONMENTS September 2015 Disclosure: This research is provided for educational purposes only and is not intended to provide investment or tax advice. All

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

Arizona State Retirement System Investment Committee Fixed Income Asset Class Review

Arizona State Retirement System Investment Committee Fixed Income Asset Class Review Arizona State Retirement System Investment Committee Fixed Income Asset Class Review June 22, 2015 EXECUTIVE SUMMARY U.S. Equity Arizona Asset State Class Retirement Overview System Fixed Income Asset

More information

Current Portfolio Structure as of September 30, 2014

Current Portfolio Structure as of September 30, 2014 State Universities Retirement System of Illinois Serving Illinois Community Colleges and Universities 1901 Fox Drive Champaign, IL 61820-7333 (217) 378-8800 (217) 378-9802 (FAX) To: Investment Committee

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

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

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

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 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 information

The case for high yield

The 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 information

Covered Call Investing and its Benefits in Today s Market Environment

Covered Call Investing and its Benefits in Today s Market Environment ZIEGLER CAPITAL MANAGEMENT: MARKET INSIGHT & RESEARCH Covered Call Investing and its Benefits in Today s Market Environment Covered Call investing has attracted a great deal of attention from investors

More information

SURS fixed income assets are distributed among 13 external managers. The SURS total fixed income assets under management are distributed as follows:

SURS fixed income assets are distributed among 13 external managers. The SURS total fixed income assets under management are distributed as follows: State Universities Retirement System of Illinois Serving Illinois Community Colleges and Universities 1901 Fox Drive Champaign, IL 61820-7333 (217) 378-8800 (217) 378-9802 (FAX) Investment Department To:

More information

Bond Investing in a Rising Rate Environment

Bond Investing in a Rising Rate Environment September 3 W H I T E PA P E R Bond Investing in a Rising Rate Environment Contents Yields Past, Present and Future Allocation and Mandate Revisited Benchmark Comparisons Investment Options to Consider

More information

An Historical Evaluation of the CBOE S&P 500 BuyWrite Index Strategy

An Historical Evaluation of the CBOE S&P 500 BuyWrite Index Strategy An Hisrical Evaluation of the CBOE BuyWrite Index Strategy Ocber 2006 The Buy-Write Strategy A Buy-Write strategy, also called a covered call, is an investment strategy in which the invesr buys a sck or

More information

Signature Perspectives US Multi-Sector Fixed Income

Signature Perspectives US Multi-Sector Fixed Income Signature Perspectives US Multi-Sector Fixed Income Signature Securities Portfolios US Multi-Sector Fixed Income As of 31 January 2012 Performance Review Investment Objective Seeks growth through capital

More information

HOSPIRA (HSP US) HISTORICAL COMMON STOCK PRICE INFORMATION

HOSPIRA (HSP US) HISTORICAL COMMON STOCK PRICE INFORMATION 30-Apr-2004 28.35 29.00 28.20 28.46 28.55 03-May-2004 28.50 28.70 26.80 27.04 27.21 04-May-2004 26.90 26.99 26.00 26.00 26.38 05-May-2004 26.05 26.69 26.00 26.35 26.34 06-May-2004 26.31 26.35 26.05 26.26

More information

A GUIDE TO AUSTRALIAN FIXED INCOME INVESTING

A GUIDE TO AUSTRALIAN FIXED INCOME INVESTING A GUIDE TO AUSTRALIAN FIXED INCOME INVESTING The Australian fixed income market vs the Australian share market The Australian share market is dynamic. On any given trading day, share prices may move rapidly

More information

Risks and Rewards in High Yield Bonds

Risks 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 information

The Case for Senior Loans

The Case for Senior Loans The Case for 1.877.622.5552 www.firsttrust.ca : A Potential Opportunity for Investors With interest rates at historically low levels, these are challenging times to invest for income. At the same time,

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

Dow Jones Target Date Funds

Dow Jones Target Date Funds Wells Fargo Advantage Funds July 1, 2015 Dow Jones Target Date Funds Prospectus Classes A, B, C Target Today Fund Class A STWRX, Class B WFOKX, Class C WFODX Target 2010 Fund Class A STNRX, Class B SPTBX,

More information

Fixed Income: The Hidden Risk of Indexing

Fixed 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 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

Brandes Corporate Focus Fixed Income

Brandes Corporate Focus Fixed Income Fact Sheet / Through 31 December 2015 (currency reported in USD) Brandes Corporate Focus Fixed Income FIRM OVERVIEW Founded: 1974 Staff Total: 325 Investment Professionals: 53 Ownership: 100% Employee

More information

State Street Target Retirement Funds - Class K

State Street Target Retirement Funds - Class K The State Street Target Retirement Funds - Class K (the "Funds") represent units of ownership in the State Street Target Retirement Non-Lending Series Funds. The Funds seek to offer complete, low cost

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

Diversifying with Negatively Correlated Investments. Monterosso Investment Management Company, LLC Q1 2011

Diversifying with Negatively Correlated Investments. Monterosso Investment Management Company, LLC Q1 2011 Diversifying with Negatively Correlated Investments Monterosso Investment Management Company, LLC Q1 2011 Presentation Outline I. Five Things You Should Know About Managed Futures II. Diversification and

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

Questions and Answers About Senior Secured Loans

Questions and Answers About Senior Secured Loans Revised August 2013 Senior Secured Loans Questions and Answers About Senior Secured Loans Joe Lemanowicz Managing Director and Head of U.S. Senior Secured Loan Team Pramerica Fixed Income U.S. senior secured

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

Insurance Dedicated Funds: Variable Insurance Trusts

Insurance Dedicated Funds: Variable Insurance Trusts At a Glance September 2015 Insurance Dedicated Funds: Variable Insurance Trusts Our goal at GSAM is to meet the financial goals of investors worldwide, now and in the future, with innovative investment

More information

Staying alive: Bond strategies for a normalising world

Staying alive: Bond strategies for a normalising world Staying alive: Bond strategies for a normalising world Dr Peter Westaway Chief Economist, Europe Vanguard Asset Management November 2013 This document is directed at investment professionals and should

More information

Annual Treasury And Investment Portfolio Update for 2015

Annual 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 information

Risk Control and Equity Upside: The Merits of Convertible Bonds for an Insurance Portfolio

Risk Control and Equity Upside: The Merits of Convertible Bonds for an Insurance Portfolio Risk Control and Equity Upside: The Merits of Convertible Bonds for an Insurance Portfolio In a survey of insurance company Chief Investment Officers conducted by Eager, Davis & Holmes 1 in May 2009, 43%

More information

Diversify portfolios with U.S. and international bonds

Diversify portfolios with U.S. and international bonds Diversify portfolios with U.S. and international bonds Investing broadly across asset classes such as stocks, bonds and cash can help reduce volatility and risk within a portfolio. Canadian investors have

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

Why Anfield s Universal Fixed Income Fund?

Why Anfield s Universal Fixed Income Fund? Why Anfield s Universal Fixed Income Fund? Disclosure Investors should carefully consider the investment objectives, risks, charges and expenses of the Anfield Universal Fixed Income Fund. This and other

More information

FREE MARKET U.S. EQUITY FUND FREE MARKET INTERNATIONAL EQUITY FUND FREE MARKET FIXED INCOME FUND of THE RBB FUND, INC. PROSPECTUS.

FREE MARKET U.S. EQUITY FUND FREE MARKET INTERNATIONAL EQUITY FUND FREE MARKET FIXED INCOME FUND of THE RBB FUND, INC. PROSPECTUS. FREE MARKET U.S. EQUITY FUND FREE MARKET INTERNATIONAL EQUITY FUND FREE MARKET FIXED INCOME FUND of THE RBB FUND, INC. PROSPECTUS December 31, 2014 Investment Adviser: MATSON MONEY, INC. 5955 Deerfield

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

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

The Search for Yield Continues: A Re-introduction to Bank Loans

The 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 information

Opportunities and risks in credit. Michael Korber Head of Credit

Opportunities 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 information

Brown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale)

Brown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale) Summary Prospectus October 30, 2015 Brown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale) Before you invest, you may want to review the Fund s Prospectus, which

More information

Manager Structure Presentation

Manager Structure Presentation Presentation to the Tobacco Settlement Investment Board May 18, 2009 Millie Viqueira Senior Vice President Jay Kloepfer Executive Vice President Callan Associates Inc. 200 Park Avenue, Suite 230 Florham

More information

Blackstone Alternative Alpha Fund II (BAAF II) Advisor Class III Shares

Blackstone Alternative Alpha Fund II (BAAF II) Advisor Class III Shares Blackstone Alternative Alpha Fund II (BAAF II) Advisor Class III Shares Blackstone For Accredited Investors Only As of November 30th, 2015 Investment approach Blackstone Alternative Alpha Fund II ( BAAF

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

Enjoy the Benefits of Professional Wealth Management Quantitative InnovationsSM Investment Advisory Program

Enjoy the Benefits of Professional Wealth Management Quantitative InnovationsSM Investment Advisory Program Enjoy the Benefits of Professional Wealth Management Quantitative InnovationsSM Investment Advisory Program As an individual investor, you have access to more investment options than ever. With these choices,

More information

McKinley Capital U.S. Equity Income Prospects for Performance in a Changing Interest Rate Environment

McKinley Capital U.S. Equity Income Prospects for Performance in a Changing Interest Rate Environment March 25, 2014 McKinley Capital U.S. Equity Income Prospects for Performance in a Changing Interest Rate Environment This paper analyzes the historic performance of the McKinley Capital Management, LLC

More information

Understanding Bank Loans: Opportunities for Diversification and Risk Reduction

Understanding Bank Loans: Opportunities for Diversification and Risk Reduction Understanding Bank Loans: Opportunities for Diversification and Risk Reduction December 28 By: Niklas Nordenfelt, CFA Senior Portfolio Manager, Co-Manager of Sutter High Yield Fixed Income Paolo L. Villasenor

More information

Documeent title on one or two. high-yield bonds. Executive summary. W Price (per $100 par) W. The diversification merits of high-yield bonds

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 information

An Attractive Income Option for a Strategic Allocation

An 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 information

SLVO Silver Shares Covered Call ETN

SLVO Silver Shares Covered Call ETN Filed pursuant to Rule 433 Registration Statement No. 333-180300-03 April 15, 2014 SLVO Silver Shares Covered Call ETN Credit Suisse AG, Investor Solutions April 2014 Executive Summary Credit Suisse Silver

More information

The Fixed Income Conundrum What s your next move?

The 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 information

The Multi-Disciplinary Income Fund

The Multi-Disciplinary Income Fund The Multi-Disciplinary Income Fund 1 ST QUARTER 2016 Distributor: Kinetics Funds Distributor LLC is not an affiliate of Kinetics Mutual Funds, Inc. Introduction Decades of declining yields fueled gains

More information

Reframing Expectations

Reframing Expectations Reframing Expectations Recognizing the Challenges and Opportunities in Fixed Income By Baird s Asset Manager Research HIGHLIGHTS: Even if facing headwinds, bonds still serve important roles in a portfolio,

More information

Fixed Income in a Rising Rate Environment

Fixed Income in a Rising Rate Environment Fixed Income in a Rising Rate Environment With interest rates at historically low levels, fixed income investors have become increasingly concerned about rising rates and how their portfolios might be

More information

Considerations for a Global Approach to Property Investing

Considerations for a Global Approach to Property Investing CONTRIBUTORS Emily Ulrich Analyst emily.ulrich@spdji.com Michael Orzano, CFA Director Global Equity Indices michael.orzano@spdji.com Philip Murphy, CFA Vice President North American Equities philip.murphy@spdji.com

More information

Chapter 1 The Investment Setting

Chapter 1 The Investment Setting Chapter 1 he Investment Setting rue/false Questions F 1. In an efficient and informed capital market environment, those investments with the greatest return tend to have the greatest risk. Answer: rue

More information

Bank Loans: A Rate-Hedging Strategy For Today s Portfolios

Bank Loans: A Rate-Hedging Strategy For Today s Portfolios INVESTMENT NOTE Bank Loans: A Rate-Hedging Strategy For Today s Portfolios May 2013 Bank Loans: A Rate-Hedging The Versatitily Strategy of Short For Duration Today s High Portfolios Yield 1 Over the past

More information

Understanding Leverage in Closed-End Funds

Understanding Leverage in Closed-End Funds Closed-End Funds Understanding Leverage in Closed-End Funds The concept of leverage seems simple: borrowing money at a low cost and using it to seek higher returns on an investment. Leverage as it applies

More information

Managing Risk/Reward in Fixed Income

Managing Risk/Reward in Fixed Income INSIGHTS Managing Risk/Reward in Fixed Income Using Global Currency-Hedged Indices as Benchmarks In the pursuit of alpha, is it better to use a global hedged or unhedged index as a benchmark for measuring

More information

Treasury Yield Curve (percent) 2-yr/10-yr Treasury Spread (bp) 10-year Corporate Spreads (bp) 5-yr Investment Grade Corporate CDS Markit (bp)

Treasury Yield Curve (percent) 2-yr/10-yr Treasury Spread (bp) 10-year Corporate Spreads (bp) 5-yr Investment Grade Corporate CDS Markit (bp) 5. Treasury Yield Curve (percent) 35 2yr/1yr Treasury Spread (bp) 4.5 4. 3 3.5 25 3. 2.5 2. 15 1.5 1..5 Treasury 'A' Financial 'A' Industrial 'A' Utility 5. 8 9 21 211 212 213 214 215 The Treasury yield

More information

The role of floating-rate bank loans in institutional portfolios

The 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 information

Median and Average Sales Prices of New Homes Sold in United States

Median and Average Sales Prices of New Homes Sold in United States Jan 1963 $17,200 (NA) Feb 1963 $17,700 (NA) Mar 1963 $18,200 (NA) Apr 1963 $18,200 (NA) May 1963 $17,500 (NA) Jun 1963 $18,000 (NA) Jul 1963 $18,400 (NA) Aug 1963 $17,800 (NA) Sep 1963 $17,900 (NA) Oct

More information

Sankaty Advisors, LLC

Sankaty 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 information