Perspectives Blog

Hungry for income? High yield munis could be your meal ticket

Chad Farrington, CFA, Head of Municipal Bond Credit Research and Senior Portfolio Manager | May 28, 2014

High yield muni bonds represent an attractive investment opportunity Professional money managers can help with the intricacies of the high yield muni space Current income and potential tax advantages in the high yield space Attractive yields, potential for price appreciation Many investors are concerned about the prospect of rising interest rates and the impact higher rates may have on bonds, especially since we’ve been in a very low rate envi…

Trouble in paradise: Q&A about Puerto Rico bonds

Chad Farrington, CFA, Head of Municipal Bond Credit Research and Senior Portfolio Manager | January 2, 2014

Why has Puerto Rico become such an issue now? Should investors be concerned with a downgrade or default? Is Puerto Rico a systemic risk for the municipal market? Historically, Puerto Rico (PR) bonds’ high yield and triple tax exemption (federal, state and local) had been a big lure for many institutional investors, such as mutual funds. PR debt exposure in municipal bond funds, namely single-state municipal bond funds, proved advantageous for sh…

Should your income be fixed?

David King, CFA, Senior Portfolio Manager | December 16, 2013

…complementary. An investment where you expect complete return of your capital at a future point in time is conservative. So is an investment with regular, defined cash returns. No wonder high-quality government and corporate bonds are a huge asset class. It feels uncomfortable to challenge the merits of popular and conservative investment vehicles, but today there is basis for doing so. The historical role of bonds, bank term deposits, savings a…

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…

Does it still pay to hold municipal bonds?

Anders Myhran, Municipal Portfolio Manager | July 29, 2014

Price is important but income should be a factor when considering an investment. Don’t get caught on the sideline, the opportunity cost could be detrimental. You must consider the short and long term when investing. Many investors say they don’t want to own bonds because interest rates are going up. They would have a point if yields were to shoot up tomorrow or next week. Since most bonds and bond funds include some degree of interest rate sen…

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,…

The end of “risk-on/risk-off”

Anwiti Bahuguna, Ph.D., Senior Portfolio Manager | February 3, 2014

…ng markets (EM) vs. developed markets (DM)) used to be low, but also rose to over 80% during this same period, reducing the benefits of cross-regional diversification. Similarly, correlation between equities and high yielding bonds rose from about 50% to over 80%. When investors took risk, most assets rallied with the exception of sovereign bonds. Conversely, when risk sold off, only sovereign bonds had positive returns. This risk-on/risk-off reg…