Perspectives Blog

The perils and pitfalls of buying individual municipal bonds

James Dearborn, Head of Municipal Bonds | February 27, 2014

…1: Tax-exempt bond issuance, redemption and net supply (2012-2013 YTD) Source: Goldman Sachs, December 27, 2013 Ratings — Stale and often volatile ratings leave individual investors at risk Individual investors typically rely on the rating agencies to determine the credit quality of securities they are considering for purchase. Unfortunately, these ratings, especially for secondary market purchases, are often stale. In addition, the ratings may…

A port in the storm — Short muni funds can offer refuge in the face of rising rates

Catherine Stienstra, Senior Portfolio Manager | October 2, 2014

…ain the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Bond ratings are divided into categories ranging from AAA (highest) to D (lowest) and are subject to change. The ratings shown are determined by using the middle rating of Moody’s, S&P and Fitch, each a third-party rating agency, after dropping the highest and lowest available ratings. When a rating from only two agencies is available,…

Puerto Rico’s double-downgrade

Michael Taylor, Senior Municipal Analyst | February 10, 2014

What’s behind the downgrade of Puerto Rico’s credit ratings by Standard & Poor’s and Moody’s? The double-downgrade puts pressure on Puerto Rico to shore up its finances in the coming weeks A future default or debt restructuring could rattle investor confidence and impact all municipal market issuers On February 4, Standard & Poor’s lowered its long-term credit rating on the Commonwealth of Puerto Rico’s (PR) general obligat…

What to expect from U.S. midterm elections

Robert McConnaughey, Director of Global Research | October 20, 2014

…states won by Mitt Romney in 2012. Conventional wisdom would suggest that President Obama’s low current approval ratings would provide a significant tailwind for the GOP, but the reality is a little more complex. First and foremost, the broad approval ratings of the legislative branch (both parties) are even lower than those for the president as the electorate is generally disappointed in Washington’s performance. Secondly, the state-by-state sit…

A primer on preferred securities

Carl Pappo, Head of Core Fixed Income | March 10, 2014

Preferred securities can offer an attractive risk-adjusted yield in a low-yield environment. Straddling the line between fixed income and equity, preferred securities can help diversify core fixed-income portfolios. Investors equipped to analyze and trade these structures are able to find attractive relative value opportunities. Co-authored by Willow Piersol, Senior Analyst As financial institutions raise capital and reduce risk, preferred sec…

Fear is not a strategy

James Dearborn, Head of Municipal Bonds | November 18, 2013

As muni bond prices fell and yields soared in recent months, fear and uncertainty kept investors away. Amidst the unprecedented fear-based sell-off, the fundamentals of the muni bond market continue to strengthen. Bypassing muni bonds may mean missing out on today’s attractive long-term buying opportunities. Tax-free income is a big reason why so many investors have included municipal bonds in their financial plans. In recent months, yie…

The case for active muni management

Kimberly Campbell, Senior Portfolio Manager | April 21, 2014

Muni bonds represent an attractive investment opportunity Active management is a value add in these volatile markets Professional money managers can help investors navigate an ever-changing environment Where does one invest in a world of uncertainty? Rising taxes, volatile markets, low yields, economic stagnation, geopolitical unrest. We live in a world of great uncertainty — yet our investment goals remain the same: a comfortable retirement,…