Fund Thought Leadership Insights is a monthly blog series highlighting the best commentaries and expert analysis pieces released by leading asset management firms. For a full archive of past articles, click here.
With interest rates at record lows and a Fed taper looming, many investors are worried about generating income and what rising rates will mean for their bond holdings. Many asset management thought leaders have turned their focus to the problem of fixed income investing in the current economic environment. Here are this month’s top five thought leadership pieces on bonds and fixed income investing:
#1 J.P. Morgan: Evolving Your Income Strategy
J.P. Morgan’s Global Chief Investment Officer, Gary Madich, explains the impact that rising rates have on bond prices and the differing sensitivity of the various types of bonds to interest rate changes. To meet the challenges posed by rising rates, Madich recommends that investors diversify their holdings, noting that emerging market bonds and dividend-paying stocks may offer better opportunities for strong returns.
Gary Madich on Bonds and Interest Rates
#2 Lord Abbett: Fixed Income Insights: Will 2014 (Finally) Be the Year of the Great Rotation?
Zane Brown reviews unrealized expectations that 2013 would mark the year that investors underwent a “Great Rotation” from mostly fixed income to mostly stock holdings. Brown notes that a fear of missing out on further equity gains may cause the “Great Rotation” to come to pass in the coming year, especially if rising rates caused by the Fed’s taper spurs bond sales.
Zane Brown on the “Great Rotation”
#3 Fidelity: Where to Find Income in 2014
A panel of five Fidelity portfolio managers – Joanna Bewick, Matt Fruhan, Rob Galusza, Kim Miller and Naveed Rahman – weigh in on income opportunities in the coming year. They note that monetary policy is likely to have a major impact on income opportunities, explaining that conditions are favorable for equities. That said, Fidelity does not predict a dramatic rise in interest rates, and the firm’s experts note that bonds can help smooth out market volatility.
Fidelity on Income Opportunities
#4 Federated: Q&A: Are High-Yield Bonds Still a Place to Be?
Federated’s Mark Durbiano fields questions on high-yield bonds. Durbiano explains that high-yield bonds are likely to offer strong returns relative to other fixed income assets, but notes that rising rates could damper the performance of all bonds. The article notes that the Fed’s taper should have limited impact on high-yield bonds, particularly as improving economic conditions tend to boost the asset class.
Federated’s Mark Durbiano on High-Yield Bonds
#5 Allianz: Emerging-Market Debt’s Silver Lining Still Shines
Allianz’s Greg Saichin, CIO of Global Emerging Markets Fixed Income, explains that he is optimistic about emerging market debt due to young demographics and increasing infrastructure growth. The article explains that investors must be careful to understand the difference between various issuers.
Greg Saichin on EM Fixed Income
Fund Thought Leadership Insights is written by Fred LaPolla, an Analyst on Corporate Insight’s Mutual Fund Monitor and Advisor Monitor research teams. For more information about CI’s asset management research, please contact Fred via email at firstname.lastname@example.org.