Review of Market Performance: Calendar Year 2018
Myriad rising risks weighed on performance in 2018, leaving investors few places to hide among the sea of red.
Credit/Fixed Income
Taking a CLOser Look at CLOs
Demand for collateralized loan obligations (CLOs) has soared in recent years, despite lingering suspicions about asset-backed securities due to their role in the global financial crisis. This paper provides an update on recent trends in the CLO market and discusses what we believe are some of the more attractive implementation options.
US Muni Bonds: The View From the Crow’s Nest
Left unaddressed, the significant and increasing problem of pension underfunding could sink some municipal issuers in the next market downturn. Although investors in high tax brackets will likely continue to benefit from holding municipal bonds as a cornerstone in their portfolios, they should diversify across states and issuers that are better prepared to navigate any rough seas ahead.
US Manager Universe Statistics: Third Quarter 2018
This chart book presents representative long-only and hedge fund manager performance for third quarter 2018.
Origination Year Defaults: A Canary in the Credit Coal Mine?
When evaluating US credit trends over the last two decades, an institutional loan default that occurs within its year of origination has often been an ominous sign The idea resembles the closely monitored first payment–default metric that consumer lenders track as a bellweather for loan quality A loan default within its year of origination has…
Rising from the Ashes: Key Developments Since the Global Financial Crisis
In this report, we briefly highlight five key post-GFC developments and discuss how investors might adapt their portfolios to these changes.
Infrastructure Debt: Understanding the Opportunity
With underlying assets that provide essential services, infrastructure debt can play a key role in institutional investor portfolios. In this research note, we review how infrastructure debt has evolved, discuss its investment qualities, and highlight a few thoughts for those considering an allocation.
Are the Credit Bears Getting Lost in the Woods?
Worries over the health of US credit markets have risen in recent months, with numerous reports highlighting the growing vulnerability of indebted companies (and thus investors) to rising rates and a potential turn in the economic cycle. This paper provides our updated thoughts across US credit markets, as well as some tactical tilts investors could employ to help navigate a few of these headwinds.
Amid Rising Risks, Should Investors Maintain Credit Allocations?
Yes, but investors should be selective in allocating to credit markets at this point in the cycle, and understand that the overvaluation of many credit assets could make attractive returns hard to come by.
Senior Loans: Recovery Rates May Fall in Next Downturn
The recovery rate on senior loans looks poised to fall in the next cyclical downturn, as weaker structures and terms impact the market. In this research note, we highlight our concerns and consider how the cocktail of unitranche loans, inflated cash flow assumptions, and weak terms could threaten recoveries in the next cyclical downturn.