Multisector Plan Can Help Avoid the Crowd in Credit

Chasing returns into—and out of—specific credit sectors happens so often in bond markets that it hardly rates a raised eyebrow. But running with the herd can be risky, which is probably why Federal Reserve officials reportedly have discussed slapping exit fees on bond funds to avoid a disorderly rush to the exit.

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Muni Investors Should Watch Both Ends of the Curve

In early 2013, we urged investors to take a hard look at the interest-rate risk in their bond portfolios. If they didn’t do it then, they have a chance to do it now.

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Keep an Eye on LBOs, but Don’t Fret Just Yet

This year’s leveraged buyouts (LBOs) are being financed with more debt and include fewer protections for creditors. Regulators, the press and market participants are watching this closely, and so are we. But we don’t think it’s worth losing sleep over—at least not yet.

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Don’t Skip the Homework: High Yield’s Overlooked Risks

Posted by Gershon Distenfeld (pictured) and Ivan Rudolph-Shabinsky of AllianceBernstein (NYSE: AB) Many investors have taken on more risk in their quest for higher returns—especially as signs have pointed to interest rates staying stable until next year. But two key elements are often overlooked: default risk and underwriting standards.

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Bank Loans: Is the Yield Worth the Chase?

Investors who rush into high-yield bank loans seeking competitive returns might find the yield they chase is hardly worth the pursuit. Loan yields—currently quoted at about 5%—seem attractive at first blush, but we think there’s a lot less here than meets the eye.

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Energy Future Holdings Default Highlights Risks of Leveraged Loans

The Texas-sized bankruptcy of Energy Future Holdings, formerly known as TXU, may have been one of the more anticipated defaults of the past few years, but investors can still learn a lesson or two from it.

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Reaching for Yield: Worth the Risk?

Investors seeking more robust returns in a lower-interest-rate environment often look to high-yield bonds for answers. But it’s critical that they don’t reach too far down the credit spectrum in search of higher yields—as tempting as it may be.

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Bond History: Rhyming, Not Repeating

When the Fed does eventually start raising interest rates, at AllianceBernstein we don’t expect to see bonds experiencing the dire scenarios of 1981 or 1994. Instead, the 2003–2006 period of slow and measured rate normalization seems more likely. But it’s not a perfect match, and we do see some important investment factors to consider.

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High Yield: The Perfect Storm That Wasn’t

In a year when the US Federal Reserve caused jitters over quantitative easing, the US government endured a shutdown and investors shifted focus to equities, it’s no surprise that pure “duration-sensitive” bonds like US Treasuries had negative returns as interest rates spiked. But high yield emerged relatively unscathed, returning over 7% for the year.

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Seven Lessons Every Fixed-Income Investor Should Learn from 2013

After more than two decades of a fixed-income bull market, 2013 was not a great year for the bond market. Rates bottomed out, many mutual funds had negative returns and bond mutual funds experienced a record $80 billion in redemptions as investors hit the panic button. But it would be foolhardy to assume that 2014 [...]

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