Rising Rates? Keep the TIPS, Leave the Duration

Treasury Inflation-Protected Securities (TIPS) have been popular in recent years with investors worried about inflation, and returns have been strong. But TIPS have benefited from a long bull market for bonds and high interest-rate sensitivity. This could be a problem ahead—unless investors do something about it.

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Municipal Bonds: Equipped to Weather Rising Rates

Muni bonds suffered a rout recently when anxiety over the Fed’s taper of bond buying roiled fixed-income markets, leaving many investors wondering where to turn. As it turns out, munis have historically been effective shock absorbers. We believe that, given the right positioning, munis can help weather rising rates.

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Concerned About Rising Rates? Add Ballast by Going Global

A US-only bond investor is affected by one business cycle, one yield curve and a single monetary policy. As long as rates were falling, that seemed like a good thing. Not so these days.

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For Abenomics, the Hard Part Is Still to Come

Prime Minister Shinzo Abe’s “Abenomics” program, designed to revive Japan’s economy, was a big success in its first five months, easily surpassing low expectations. But it’s drifted off course since it began, and the going is sure to get tougher from here. Still, it’s too early to write off this policy experiment.

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Keeping Your Balance During Shaky Markets

By Paul DeNoon (pictured) and Gershon Distenfeld While capital markets have had their ups and downs, it’s been at least 15 years since we’ve seen such a broad swathe of the global markets take a hit at the same time—risky and “risk-free” assets alike.

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Municipals: A Glimpse of What’s to Come?

Federal Reserve Chairman Bernanke reiterated today that a healthier economy would prompt the Fed to end its unprecedented bond-buying program, which has kept yields artificially low. Speculation on this question over the last several weeks has caused a sharp bond sell-off and rising yields. But we don’t see this as the start of a rout [...]

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Detroit Municipal Bonds:
Who’ll Share the Pain?

Joseph Rosenblum (pictured) and Neene Jenkins It could be several weeks or a few months. But before long, the city of Detroit is likely to default on some of its outstanding bonds and possibly file for Chapter 9 bankruptcy protection. It would be a historic bankruptcy and is sure to create uncertainty in the municipal [...]

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DC Solutions: Adding Global Bonds to Target-Date Funds

By Alison Martier and Seth J. Masters Within US defined contribution (DC) target-date funds (TDFs), whether we’re considering customized TDFs for larger plans or packaged solutions for smaller plans, our research shows that having a bond allocation that is not US-centric can lead to better outcomes and enhance the effectiveness of the glide path.

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A Guide for Globalizing DC Core Menus

By Alison Martier and Seth J. Masters At a time when plans are seeking to control risk and enhance returns, hedged global bonds can help improve outcomes for US defined contribution (DC) investors. Hedged global bonds have delivered better risk-adjusted results over time than US bonds. So how do we recommend plan sponsors incorporate global bonds, [...]

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In Search of DC Solutions: Are Global Bonds the Answer?

By Alison Martier and Seth J. Masters Many US defined contribution (DC) plan sponsors are seeking solutions aimed at reducing undue volatility—excess volatility without a commensurate increase in return—that can prevent a plan and its participants from achieving their long-term objectives. Our research suggests that hedged global bonds may be one solution.

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