Global Bonds: Avoiding Unintended Consequences

More and more, global bonds are being used as core portfolios for investors seeking an anchor to windward for their stock investments. While this is generally a good thing, some investors are discovering that the decision to go global can have unintended consequences: certain global bond portfolios have much higher volatility than is usually associated [...]

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“Bad Bank” Unlikely to Solve Spain’s Banking Problems

As Spain slips back into recession, the Spanish government has begun talks on ring-fencing the country’s bad property loans in one or more separate entities. While this may help, we doubt whether the move will be enough on its own to solve Spain’s problems, as our European banking analyst, Victoria Norman, discusses below. 

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Moving Beyond Municipals

Taxable US investors usually invest the fixed-income part of their portfolios in municipal bonds. But a tax-aware strategy with the flexibility to look for the highest after-tax return across sectors is likely to be more rewarding over time, as my colleague Terry Hults explains below.

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The Advantages of Going Global in Bonds

Bond investing, like equity investing, is an increasingly global proposition today. Opportunities are present all over the world. Yet unlike equity investors, who have generally embraced global investing, bond investors in many countries continue to put all their eggs in one basket by focusing primarily on their home debt markets. We think this is a [...]

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The Corporate Edge in Emerging Markets

Why do so many investors restrict their emerging-market bond investments to sovereigns? The corporate bond universe has grown dramatically in recent years—and offers a terrific combination of higher credit quality, wider spreads and potential capital gains.

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Meeting Your Fixed-Income Goals

The most common goals for fixed-income investors are stability, generating income and diversifying their equity exposures. Our research suggests that they can achieve all three goals more efficiently if they don’t remain wedded to their traditional approaches and benchmarks.

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The Importance of Being Active

The financial crisis of the last four years has damaged the financial conditions of cities and states—and municipal bond insurers. In our view, this has increased the value of research and undermined individual investors’ classic approach to municipal bonds: laddering. My colleague Guy Davidson explains why, below and in the Reuters muniland blog.

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The Tyranny of Bond Benchmarks

With interest rates at historic lows and the number of risk-free assets in the world shrinking, sovereign bonds are becoming an increasingly risky and complex asset class. In this environment, tethering portfolios to benchmark bond indices is fraught with problems.

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High-Yield Bonds: Are ETFs the Best Vehicle?

High-yield exchange-traded funds (ETFs) have been growing like gangbusters in recent months, despite continued weak performance relative to the indices that they track. While these instruments make sense for investors who make rapid, tactical trades into and out of the asset class, we think they’re a poor choice for those seeking to gain long-term exposure [...]

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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.

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