Investors often ask us how they should think about bond markets in a time of rising yields. Are we facing a situation similar to 1994? Or worse, could it be like 1981, when five-year US Treasury yields soared to 15%? Our answer often surprises them: we don’t think it’s either. [Read More...]

Reaching for Yield: Worth the Risk?
Investors seeking more robust returns in a lower-interest-rate environment often look to high-yield bonds for answers. But it’s critical that they don’t reach too far down the credit spectrum in search of higher yields—as tempting as it may be. [Read More...]
Muni Investors Should Watch Both Ends of the Curve
In early 2013, we urged investors to take a hard look at the interest-rate risk in their bond portfolios. If they didn’t do it then, they have a chance to do it now. [Read More...]
Keep an Eye on LBOs, but Don’t Fret Just Yet
This year’s leveraged buyouts (LBOs) are being financed with more debt and include fewer protections for creditors. Regulators, the press and market participants are watching this closely, and so are we. But we don’t think it’s worth losing sleep over—at least not yet. [Read More...]
Multisector Plan Can Help Avoid the Crowd in Credit
Chasing returns into—and out of—specific credit sectors happens so often in bond markets that it hardly rates a raised eyebrow. But running with the herd can be risky, which is probably why Federal Reserve officials reportedly have discussed slapping exit fees on bond funds to avoid a disorderly rush to the exit. [Read More...]
Bank Regulation: A New Opportunity in Credit?
European banks are issuing new subordinated bonds that can be written off in a crisis. For investors who are willing to take the risk, our analysis suggests these bonds may provide a way to beat the low returns in today’s corporate bond market. [Read More...]
The Core of the Modern Bond Strategy: Go Global
“Keep Calm and Carry On” reads a popular World War II–era British motivational poster. We think the first half of the slogan is good advice for bond investors in today’s uncertain markets, but we’d substitute the second with “Go Global.” [Read More...]
The Right Fit: Global Bonds and DC Plans
At a time when US defined contribution plans are seeking to control risk and enhance returns, hedged global bonds can improve outcomes for participants and sponsors. But how do plans incorporate global bonds in core menus and target-date funds? [Read More...]
CLO Rule Change Clouds Outlook for Bank Loans
Retail investors fell out of love with US bank loans this year, but demand from issuers of collateralized loan obligations (CLOs) has remained strong. New regulations may change that. Should investors be concerned? We think so. [Read More...]
Divergent Interest Rates: A Golden Opportunity
US interest rates look set to rise in 2015, and that’s unsettling for some fixed-income investors. But here’s the good news: US bonds aren’t the only game in town. [Read More...]
High-Yield ETFs: Don’t Get Fenced In
Few high-yield investors have weathered the recent plunge in energy prices without experiencing at least a few bumps and bruises. But those who relied on broad market exchange-traded funds (ETFs) to gain market exposure are nursing the most serious wounds. Coincidence? We don’t think so. [Read More...]
Lesson of the Oil Collapse? Do Your Own Credit Homework
The plunge in oil prices has hurt many highly-leveraged energy companies and their creditors. But it also reinforced an important lesson that investors and asset managers probably learned when they were schoolchildren: Always do your own homework. [Read More...]
Moving Beyond Municipals
Taxable US investors usually invest the fixed-income part of their portfolios in municipal bonds. But a tax-aware strategy with the flexibility to look for the highest after-tax return across sectors is likely to be more rewarding over time, as my colleague Terry Hults explains below. [Read More...]
Don’t Be Caught Long: Strategies to Curb Interest-Rate Risk in the Municipal Market
A municipal portfolio full of bonds with maturities in the 20- to 30-year range is exposed today to the high risk of rising interest rates. Now may be the right time to shorten your duration and lower your credit quality. [Read More...]
Stockton’s Bankruptcy: Not a Harbinger of Things to Come
The financial failure of Stockton, California, is a sad tale of inflated expectations and poor decision making, but it’s not a harbinger of things to come in the US municipal bond market. Stockton is a unique case, as my colleague Guy Davidson explains below. [Read More...]
Squawk: US equity averages threaten deeper corrections US equity averages have…
US equity averages threaten deeper corrections US equity averages have taken a lead on the downside this week with the previously more vulnerable European equity indices having taken global markets… [Read More...]
The Underfunded Pension: States Take Action
State and local governments with significant pension funding shortfalls are coming under increased political pressure due to new transparency rules in accounting. My colleague Joe Rosenblum examines their options. [Read More...]
Emerging-Market Credit Has Come of Age
While investors have flocked to emerging-market government bonds in recent years, some still perceive emerging-market corporate bonds as an immature asset class. Shamaila Khan, who manages global credit portfolios, questions some assumptions about emerging credit. [Read More...]
LDI: How Large an Allocation to Global Bonds?
Liability-driven investors can reap significant benefits from globalizing their long-duration bond portfolios, but how much should they sow? How large an allocation to nondomestic bonds is appropriate? Our research suggests that even a modest allocation can meaningfully improve an LDI portfolio’s risk-adjusted return potential. [Read More...]
Global Bonds: Protection in Down Markets
As US Treasury yields continue to plumb record lows, some have quipped that government bonds have gone from offering risk-free returns to “return-free risk.” Indeed, when interest rates inevitably rise from their current levels, bondholders face the prospect of poor or even negative returns. [Read More...]