Portfolio Positioning: First Quarter 2016
Over the last several years, the fixed income landscape has been reshaped by unprecedented monetary and fiscal policy, which has artificially depressed yields on government-related fixed income securities and caused the Barclays U.S. Aggregate Index to become heavily concentrated in low-yielding Treasury and agency debt. To uncover value, we have looked beyond the Barclays U.S. Aggregate Index, preferring fixed income spread sectors as opposed to the Treasury, agency, and traditional pass-through mortgage sectors. Currently, we see the most compelling value in asset-backed securities (ABS) and non-agency residential mortgage-backed securities:
- High-quality collateralized loan obligations (CLOs), a subset of the ABS market, have had historically low default rates, with AAA-rated and AA-rated CLO tranches experiencing no defaults or principal losses between 1994 and 2014. With recent spread widening across the capital structure, high-quality CLOs are increasingly attractive on a relative basis, with yield premiums of 100-200 basis points relative to corporate bonds of the same credit rating.
- Non-agency RMBS are supported by strong fundamentals, as delinquency rates have declined significantly from crisis highs, owing to the recovery in home prices and historically low rates. The sector is also benefiting from a healthy technical backdrop.
Please read our full report to learn more about Guggenheim’s outlook for each of the following sectors:
- Investment grade corporates
- High yield
- Bank loans
- Asset-backed securities and CLOs
- Non-agency residential mortgage-backed securities
- Commercial mortgage-backed securities
- Commercial real estate debt
- Agency residential mortgage-backed securities
- Treasury and agency securities
Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC ("Guggenheim"). Guggenheim Funds Distributors, LLC is an affiliate of Guggenheim.
Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objective, risks charges, expenses and the other information, which should be considered carefully before investing. To obtain a prospectus and summary prospectus (if available) click here or call 800.820.0888.
Investing involves risk, including the possible loss of principal.
*Assets under management is as of 09.30.2020 and includes leverage of $14bn. Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC.
Guggenheim Investments. All rights reserved.
Research our firm with FINRA Broker Check.
• Not FDIC Insured • No Bank Guarantee • May Lose Value
This website is directed to and intended for use by citizens or residents of the United States of America only. The material provided on this website is not intended as a recommendation or as investment advice of any kind, including in connection with rollovers, transfers, and distributions. Such material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. All content has been provided for informational or educational purposes only and is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation. Investing involves risk, including the possible loss of principal.