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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| 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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A bond picker's market: Bubble or not |
InvestmentNews - Oct. 20, 2010 - By John Radtke
The following is a market commentary by John Radtke, president of Incapital LLC, a securities and investment banking firm based in Chicago, Boca Raton and London.
High levels of correlation in the U.S. stock market have made picking individual stocks increasingly difficult. Recent studies indicate that about 80% of price action in the majority of widely traded stocks is closely correlated to a related index.
Are bonds different? While fixed income securities trade in correlation with similar bonds under most market conditions, ‘bond-picking' may be as important as ever. Why?
First, let's consider whether bonds are trading in a euphoric market. The warnings in the financial media of a bond bubble are more intense than ever. Dozens of high profile prognosticators are saying that there is more upside risk to interest rates than downside reward. While that may prove to be a reasonable forecast for new buyers of long term U.S. Treasuries, low rates do not necessarily create bubble conditions in the greater fixed income universe.
A bubble occurs when investors pile into an asset class irrationally. When calmer heads prevail, liquidation occurs and the bubble bursts. However, a strong case can be made that many bond types, structures and maturities do not meet the test of bubble-like irrationality.
Although interest rates in the U.S. are historically low, the prospect of further quantitative easing from the Fed, low inflation and slow job growth are keeping rates in check across the yield curve. Assuming that rates will stay range-bound for an extended period of time, cash may not be the optimal place to wait.
The longest end of the curve is also suspect, as a 100 basis point rise in long term rates would result in 10+ point price declines on some bonds. While a 30-year bond may lose 12 points worth or principal value for a 100 basis point rise in rates, a 10-year bond may lose 7 points, a 5-year bond 3 points and a 2-year bond only about one point.
A laddered portfolio of individual bonds can include mid-range maturities without taking on excessive interest rate volatility. Out to 10-15 years, investors can pick up 75% of the slope of the curve without incurring the volatility of the very long end of the curve.
A well researched bond portfolio with staggered maturities and bond types might consist of a mix of callable, non-callable, market-linked and step-up securities. On the shorter end of the curve, a laddered portfolio of one to five year CDs is one way to generate income and liquidity for reinvestment.
In the middle of the curve, picking municipal, GSE or corporate bonds presents a range of options that need not be intimidating. With a modest amount of extra work, advisers with bond expertise can differentiate themselves from those that rely on bond funds or ETFs.
New issues are one convenient way to access individual bonds. Alternatively, the following bond-picking tips are guidelines for finding value and efficient execution in secondary market bonds:
For the complete article visit InvestmentNews.com
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Income Security Recommendation January 2013 Issue.
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