| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Bond Flight Means U.S. Investors Overlook Riskier Debt for Higher Yields |
Bloomberg - Jan. 5, 2011 - By Alexis Leondis
A recovering economy prompted the biggest withdrawals last month from U.S. bond funds in more than two years. That was a mistake, according to Craig Brothers, a portfolio manager specializing in fixed income.
Rather than abandoning fixed-income investments for equities or cash, investors should consider shifting from the safest securities, such as Treasuries, to riskier fixed-income assets such as international debt for higher yields, said Brothers, who oversees $3 billion in assets at Los Angeles-based Bel Air Investment Advisors.
Concerns that recent outflows may signal the beginning of a bond bubble are “bogus” because individual investors’ withdrawals are a small percentage of the overall U.S. bond market, said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC. Interest rates are still likely to rise in 2011, LeBas said.
“You can use other fixed-income strategies to get an equity-like return,” Brothers said. “It’s wrong to think that because rates move up you should flee.”
Bond mutual funds had the biggest client withdrawals in more than two years in the week ended Dec. 15, with withdrawals of $8.6 billion, according to the Investment Company Institute, a Washington-based trade group. Withdrawals were $4.4 billion in the week ended Dec. 21, the third straight week of outflows. The Standard & Poor’s 500 Index gained almost 11 percent in the fourth quarter, including reinvested dividends.
Bull Market Ends
Investors put $245 billion into bond mutual funds from Jan. 1, 2010 through the end of November, bringing net deposits since the beginning of 2008 to $643 billion, according to data from Chicago-based Morningstar Inc.
“We’re definitively at the end of the bond bull market, but it’s going to peter out rather than burst,” said Jason Pride, director of investment strategy at Glenmede in Philadelphia. That’s because there’s a wave of baby boomers moving to retirement from employment and still a huge demand for stable, constant income, which fixed-income securities provide, said Pride, whose firm oversees $19 billion in assets.
Taxable bond funds had net redemptions of $837 million compared with $3.5 billion for municipal funds for the week ended Dec. 21. Municipal bond selling picked up after Meredith Whitney, the banking analyst, forecasted “hundreds of billions of dollars” in municipal defaults in a Dec. 19 segment on CBS Corp.’s “60 Minutes,” according to LeBas of Janney Montgomery Scott in Philadelphia.
‘Overblown’ Distress
The negative headlines about the financial distress of municipalities are “overblown” and the core of a high-net- worth investor’s fixed-income portfolio remains having high- quality, investment-grade tax-free general obligation and essential service revenue bonds, said Alan Zafran, co-founder of Los Angeles-based Luminous Capital investment advisory firm, which manages $4 billion for about 250 families.
Rising rates means that investors also should consider adding higher yielding fixed-income securities such as emerging- market bonds to the mix, he said.
George L. Taylor, a fixed-income manager at Moss Adams Wealth Advisors in Seattle, who advises clients with an average net worth of $3 million to $10 million, said his firm has been adding to portfolios and increasing their fixed-income allocations to international and emerging-market debt through funds such as those managed by Pacific Investment Management Co. in Newport Beach, California.
Canadian Bonds
Many clients are investing in sovereign debt and domestic high-yield bonds, said Brothers of Bel Air Advisors. The sovereign debt fund used by Bel Air has a focus on emerging- market bonds with durations of about 3 years and provides yields of about 5 percent. Brothers said he prefers U.S. high-yield bonds with durations of up to 4 years that offer yields of 7 percent. High-yield bonds are generally high-risk debt rated below BBB- by Standard & Poor’s and Baa3 by Moody’s Investors Service.
For the complete article visit Bloomberg.com
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