A thought-provoking panel discussion at the recent Institute of International Finance meetings in Sydney, held alongside the G20 meetings, left me asking myself a question. The topic of the panel was the impact of regulatory reform on small and medium enterprises and the emerging-market financial sector. After the discussion, I thought, what if the world was free from counterparty risk? Read more
Posts from the ‘Institutional Investor’ Category
As we’ve had conversations with clients, heard from consultants, and read in the press, yield-starved investors are turning to riskier asset classes and alternative investments to add income to their portfolios. But what if it didn’t have to be that complicated? What is often overlooked is the possibility to earn a far greater return than the quoted yield on any given bond, even in the current rate environment. In fact, it is possible to earn a return of more than two times the quoted yield if rates stay right where they are…and all we need to do is rely on the passage of time. It’s all possible because of two words: roll return.
In the realm of municipal bonds, the enormous problems facing Puerto Rico are well-known: part Greece, part California, and part dodo bird. There is no possible way that the commonwealth rebounds…the financials are a disaster…these are comments we’ve heard ad nauseam. These comments, though, don’t help investors much and really reduce the situation to a few catchy soundbites.
For our investment team, when analyzing municipal debt, two of the major factors we consider are willingness and ability to pay. Read more
You walk into work one morning, fill up your coffee cup, turn on your computer, and click over to your favorite news site. In an instant, you see there’s rioting in the streets of Istanbul. Argentina’s currency is in a freefall. The Federal Reserve has hiked interest rates unexpectedly, while the largest land trust in China is on the brink of default. You gasp for a breath and fall back into your chair, spilling coffee all over the tie your daughter gave you for Christmas. You start to think that this is going to be a very bumpy ride. Historically, in similar low-rate, macro-volatile environments, you may have turned to asset classes like high yield, emerging markets, and preferred securities to add yield to your portfolio. But by doing so, you are exposing yourself to asset classes that are more sensitive to heightened systemic risks with little room to hide. So, what if there was an option that offered a similar yield/return profile and also had the ability to defend against increased macro headwinds. Read more
Equity investors can put their money to work across nine style boxes (think of the large-mid-small/growth-core-value matrix). That’s some diversification potential. Why is it then that some investors only have one flavor of fixed income in their portfolios?
Why would investors demand nine styles of equity, but seldom have more than one fixed income allocation – usually a core or core-plus strategy benchmarked to something like the Barclays Aggregate Index? Read more