After lying quiescent for many months, volatility has suddenly returned to government bond markets. Many investors have been surprised by the ferocity of the move and are asking themselves whether this is anything more than a tempest in a teacup or the beginning of something bigger. In our view, a combination of fundamental and technical…
The lack of corporate debt liquidity is certainly worrisome—indeed, it is one of a myriad of similar potential trouble spots—and has some idiosyncratic elements investors should take into account. Observers have been warning of a potential crisis in corporate debt since the 2010 passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which…
Asia has a structural and cyclical need for alternative credit providers; given where Asia is in the credit cycle, special situations and direct lending strategies should offer attractive risk-adjusted returns Returns for traditional Asian fixed income and credit are unattractive today. However, opportunities remain in the less liquid, underserved, and complex spheres of corporate lending…
This chart book presents representative marketable and hedge fund manager performance for first quarter 2015. The median Global ex US Small-Cap Equity manager posted the highest return (5.9%) for the quarter; the median manager in this asset class returned -1.6% for the one-year period ending March 31, 2015. The median US REIT manager posted the highest…
Many factors contributed to the global financial crisis, but an excessively high level of indebtedness built up over many years was a crucial one. Although the crisis first blew up in the US housing and mortgage markets, the receding tide of liquidity revealed many other exposed debtors, especially within the Eurozone. In the aftermath of…
We continue to find high-yield bonds uncompelling; select opportunities in high-yield energy credit may offer attractive alpha Solid credit fundamentals and 6%+ yields in a low-return environment have lured some investors back to high-yield bonds, but current coupons will serve to cap future returns and offer little protection in the (somewhat unlikely) event the credit…
Talks between Greece and its Eurozone creditors to extend its bailout may again break down and thus trigger more volatility for local assets, but the potential for contagion to other asset markets is contained for several reasons. All involved parties have strong incentives to eventually reach an agreement. Even if they can’t, the fact that…
We maintain our neutral positioning for municipal bonds Though yields have moved below the 2% level that we previously viewed as a threshold for underweighting munis, other factors have changed the equation. Treasury yields have plunged as well, and ten-year Treasuries currently yield less than ten-year munis. Muni issuance remains quiescent, with new issuance at…
This chart book presents representative marketable and hedge fund manager performance for fourth quarter and calendar year 2014. US Real Estate Investment Trust (REIT) managers posted the largest median returns for the fourth quarter (14.2%) and the one-year period ending December 31, 2014 (31.2%).
In many ways, 2014 was a tale of two halves as returns reversed in the second half. Renewed US dollar strength and falling commodity prices were key contributors to the reversal. This brief chart book looks at returns and other market metrics for 2014.