• Public Fixed Income

    Emerging Market Debt Perspectives: A Specialized Q&A for Insurance Investors

    March 2019

    To say the past ten years have been uniquely challenging for insurance investors would be an understatement. As developed market interest rates fell and regulatory scrutiny increased, many investors turned to emerging market debt (EMD) to reach for the yield their portfolios required. Despite this increased willingness to invest in the asset class, we frequently field questions from clients and prospects in the insurance space about the inherent risks of EMD, especially when compared to developed markets.

  • Public Fixed Income

    Are We There Yet?

    March 2019

    We believe we're in the late expansion phase of the credit cycle. At present there seems to be an elevated risk of recession by market participants in the 2020-2021 timeframe. Our credit cycle model is based on eight key indicators which we’ve back-tested rigorously since the mid-1980’s: high yield spreads, 3 mo. /10 yr. Treasury curve, Senior Loan Officer Opinion Survey, CCC issuance, non-financial debt growth, profit growth, shareholder payout ratio and Fed policy. In prior down cycles (’01, ’08, ’15) our credit model flashed an average of six sell signals each time. Today our model is flashing four sell signals. We don’t expect a credit down cycle in the next 12 months despite recent market anxiety of one potentially occurring.

  • Public Fixed Income

    The Tentacles of Automobile Electrification

    2018

    Technological change can be disruptive and the electrification of the automobile is just the latest advancement to challenge our conventional thinking. Many believe that battery technology holds the key for the mass adoption of electric vehicles globally and that a technological race is occurring now. This viewpoint explores some first and second order effects of electrification on numerous industrial sectors, leaving some potentially teetering on the edge of fundamental change. Even though many of the impacts discussed here are longer term, we believe investors should not be complacent when thinking about the proper positioning of their portfolios.

  • Public Fixed Income

    Searching for Yield in an Uncertain World: The Case for High Quality U.S. High Yield

    2017

    Solid fundamentals and supportive market conditions have helped to sustain a positive performance in high yield. However we believe we are entering the later stages of the credit cycle, which calls for additional caution and defensive positioning. We believe there are a number of characteristics that may make the high quality high yield asset class attractive to investors in the current environment.

  • Public Fixed Income

    Reflation and the case for Leveraged Loans

    2017

    Leveraged loans is an asset class that has historically performed better in rising rate environments. The current administration’s desire to pursue a pro-growth reflationary agenda could be the spark that gets rates moving higher. In this study, we identify the main structural and performance characteristics that could make leveraged loans attractive in a potential reflationary environment.

  • Public Fixed Income

    Optimize Structured Finance With More Than Just A Core Allocation

    2017

    We believe that fixed income investors should consider a dedicated or standalone Structured Finance portfolio, beyond their core or core-plus allocations, that offers the potential for enhanced income, diversification, or duration.

  • Public Fixed Income

    A Hidden Gem for Fixed Income Investors: Finding Opportunities in Structured Finance

    2016

    We believe the structured finance sector is often an overlooked asset class for core fixed income investors and can offer attractive yields in a large, liquid market.