Parts of China’s “shadow banking system”—broadly defined as the non-bank credit and funding markets—have some troubling similarities to US securitization markets circa 2007–08. Specifically, the “guaranteed returns” and off–balance sheet nature of certain products—as well as a “borrow short and lend long” asset-liability mismatch—are worrisome features, particularly considering that the area, which barely existed in…
Given the tremendous growth in debt-financed activity, investors are rightly wondering whether China is near a tipping point where its credit boom becomes a credit bust. China recently made headlines when it allowed its first ever bond default. A second smaller bond default has occurred in the weeks since. Add to that various news stories…
We maintain our neutral positioning for municipal bonds As prices fell and yields rose in the latter half of 2013, investors pulled money from muni bond funds, forcing managers to sell bonds in an increasingly illiquid market. Conditions reversed around year-end into 2014 as Treasury yields have fallen, money began flowing in, and issuance plummeted….
While cap-weighted benchmarks for bond portfolios remain the norm, indexes based on other criteria are increasingly available. Benchmarks are an essential tool for investors to monitor and analyze overall portfolio performance, as well as the success of investment strategies and managers. Comparing manager performance against benchmarks also can help inform decisions about whether to use…
The new Treasury FRNs are attractive not only for money market funds and institutions that roll T-bills within large liquidity or collateral pools, but also for other institutional investors intent on reducing interest rate risk within their fixed income allocation.
An extensive examination of long-term trends and returns in U.K. equities, gilts, and Treasury bills.
Many institutions are reviewing their fixed income exposure in light of concerns over the prospects for rising interest rates. While shortening duration to protect portfolios against higher rates ahead seems intuitively appealing, experience indicates it is ill-founded.
“130/30” has become the most common shorthand for describing an investment strategy that relaxes the long-only constraint of traditional equity portfolios and incorporates both long and short equity positions, while maintaining a 100% net equity exposure to the market. The report analyzes what is behind the recent surge of 130/30 products and how to potentially…
An introduction to U.S. TIPS, their performance and correlations to other asset classes, as well as the pros and cons for a TIPS allocation and investing strategies.
A discussion of the role of bonds in policy portfolios and the factors to consider (duration, sector allocation, management approach, benchmarking, etc.) when implementing a fixed income allocation.