Rolling for Return
Today’s low interest rates and the uncertainty around the timing of future increases have convinced some bond investors to invest in shorter-term bonds and cash. But yield is just one of several sources of bond returns that investors can pursue, as my colleague Terry Hults explains below.
read moreAsian Bonds: An Underappreciated Opportunity
With bond yields at historical lows and the risk-free status of many developed countries under question, many investors are looking to diversify the income stream in the defensive part of their strategies. So why are Asian ex Japan bonds typically so underrepresented in fixed-income portfolios?
read moreLatest Deal Postpones Greece’s Day of Reckoning
The second rescue package for Greece that was agreed upon yesterday by euro-area finance ministers should reduce the probability of a near-term Greek bankruptcy and possible euro exit. But substantial implementation risks remain and the latest analysis by the country’s own lenders suggests that more needs to be done in the medium term.
read moreA “Go” Signal for Equity Outperformance
Given the skimpy yields on bonds, the opportunity in equities has rarely been more provocative, at least according to one fairly reliable indicator, as my colleague Gerry Paul ably argues below.
read moreIncome Investing Takes Homework, Too
Equity-income investing can be highly rewarding, but it is not without its potential pitfalls. The rules of careful stock-picking still apply.
read moreHigh-Yield Bonds: Equity-Like Returns with Lower Risk
On the surface, high-yield bonds look a lot like their relatives in the fixed income world. But in some key respects, high-yield debt acts a lot more like equities than like other bonds. This has some often unappreciated implications for portfolio construction.
read moreUS Housing Finance: Our Vision for a Privately Led System
There’s a growing consensus today that the US government’s huge footprint in the $10.5 trillion mortgage market needs to shrink, with the private sector taking the lead. But there is less agreement on how the transition to a new system should take place. Here’s our perspective as investors in the mortgage market on what is [...]
read moreThe Risk in De-Risking Now
The extraordinary market volatility and poor equity returns of recent years—as well as fears about the macroeconomic outlook—have prompted many investors to contemplate de-risking their overall portfolios. Perhaps they should—but first, they should contemplate the return side of the equation.
read morePrivate Sector Involvement Is Unlikely in Second Portuguese Bailout
With 10-year Portuguese bond yields above 14% (see Display), the market is suggesting that Portugal will soon need another bailout from its euro-area partners. While we share the market’s skepticism about the sustainability of Portugal’s public sector finances, we doubt that policymakers at this stage will seek to impose losses on private sector creditors, as [...]
read moreMaking Forecasts Reliable—and Useful
If there’s one thing you know about capital-market forecasts, it’s that they’re usually wrong. So why bother forecasting—or paying attention to forecasts?
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