NEW YORK – Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, today provided its Third Quarter 2017 Fixed-Income Outlook, “The Best Offense Is a Good Defense.”
With this quarter’s outlook, we also release timely and relevant video commentary from Portfolio Manager James Michal and Head of Macroeconomic and Investment Research Brian Smedley.
Among the highlights in the 32-page report and video:
- The confluence of rate hikes, plans for tapering of the Fed’s portfolio reinvestments, low volatility, tight spreads, and a flatter credit curve could snap the market from its complacency. Given where asset prices are, they would have a long way to fall.
- Credit risk assets are particularly at risk of a correction, so we have continued to reduce our exposure to that sector. Our high-yield corporate bond allocation across our Core and Multi-Credit strategies is now at the lowest level since their inception. Accordingly, we have reduced our positions in lower-rated bank loans and CLO debt.
- We have increased allocations to non-Agency RMBS, selected senior CLO tranches, certain classes of asset-backed securities, and bank preferreds.
- In our view, the best strategy in the current market is to add to higher-quality assets, reduce sensitivity to spread widening, and maintain a barbell position that stands to benefit as the yield curve flattens further.
About Guggenheim Investments
Guggenheim Investments is the global asset management and investment advisory division of Guggenheim Partners, with $237 billion1 in assets across fixed income, equity, and alternative strategies. We focus on the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth managers, and high-net-worth investors. Our 275+ investment professionals perform rigorous research to understand market trends and identify undervalued opportunities in areas that are often complex and underfollowed. This approach to investment management has enabled us to deliver innovative strategies providing diversification and attractive long-term results.
1Guggenheim Investments total asset figure is as of 6.30.2017. The assets include $11.7bn of leverage for assets under management and $0.4bn for assets for which Guggenheim provides administrative services. Guggenheim Investments represents the following affiliated investment management businesses: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Real Estate, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and Guggenheim Partners India Management.
Investing involves risk. In general, the value of fixed-income securities fall when interest rates rise. High-yield securities present more liquidity and credit risk than investment grade bonds and may be subject to greater volatility. Investments in bank loans securities involve special types of risks, including credit risk, interest rate risk, liquidity risk and prepayment risk.
This information herein is distributed for informational purposes only and should not be considered as investing advice or a recommendation of any particular security, strategy or investment product. This material contains opinions of the author but not necessarily those of Guggenheim Partners or its subsidiaries. The author's opinions are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. ©2017, Guggenheim Partners, LLC. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC.