Fixed-Income Outlook: Managing While Risk Premia Shrink

 

The Federal Reserve’s pause in policy has supported a rally in most credit sectors, but investors should worry about excesses continuing to build this late in the cycle.

   

Portfolio Manager Steve Brown and Head of Macroeconomic and Investment Research Group Brian Smedley share insights from the second quarter 2019 Fixed-Income Outlook.

 
 
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Portfolio Strategy
Fixed-Income Outlook


Q2 2019 Fixed-Income Outlook

The Federal Reserve’s pause in policy has supported a rally in most credit sectors, but investors should worry about excesses continuing to build this late in the cycle.

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Important Notices and Disclosures

Investments in fixed-income instruments are subject to the possibility that interest rates could rise, causing their values to decline. High yield and unrated debt securities are at a greater risk of default than investment grade bonds and may be less liquid, which may increase volatility. Investors in asset-backed securities, including collateralized loan obligations (“CLOs”), generally receive payments that are part interest and part return of principal. These payments may vary based on the rate loans are repaid. Some asset-backed securities may have structures that make their reaction to interest rates and other factors difficult to predict, making their prices volatile and they are subject to liquidity and valuation risk. CLOs bear similar risks to investing in loans directly, such as credit, interest rate, counterparty, prepayment, liquidity, and valuation risks. Loans are often below investment grade, may be unrated, and typically offer a fixed or floating interest rate. 

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© Guggenheim Investments. All rights reserved.

Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and Guggenheim Partners India Management.