Another lesson is that investing for
the average investment grade credit quality is good also.
Not exact matches
Cannon figures that the
average credit quality of a the big banks lending portfolio probably falls halfway between high - yield debt and
investment grade.
Within fixed income, we suggest raising
average credit quality, particularly focusing on
investments in areas like high -
grade corporate and municipal bonds.
Each account will contain
investment -
grade taxable bonds rated BBB − or higher at time of purchase.2 The
investment team will seek to maintain an overall portfolio
credit rating
average of A −.2 Please be aware that lower rated bonds do carry additional risk compared to higher rated bonds.
For example, by comparing a group of corporate bonds (like
investment grade corporate bonds) vs. treasuries, you get a picture of where the
average investment grade bond
credit spread currently stands.
Two of the largest risks are that the
average credit quality of bonds in this sector is well below
investment grade and the heavy issuance of zero coupon bonds creates a sector that has one of the longest durations in the municipal bond market.
That explains why TJX has a very strong
investment grade credit rating that allows it to borrow at an
average interest rate of just 2.9 % (only 0.4 % higher than a 10 - year US Treasury).
In addition, these funds must invest primarily in
investment -
grade fixed - income securities, such that the
average credit quality of the portfolio as a whole is
investment grade (BBB or equivalent rating or higher) and not more than 25 % of the portfolio's holdings are invested in high yield fixed income securities.
It is based on the ICE BofAML Diversified High Yield US Emerging Markets Corporate Plus Index which tracks the performance of corporate bonds denominated in US dollars with an
average credit rating below
investment grade.
Investments are restricted to fixed - income securities with an
average credit quality rating of double - A and minimum
credit quality rating of
investment grade.
And as The Financial Times noted on Monday: «US
investment grade is now above the main 50 -, 100 - and 200 - day moving
averages, sending a bearish signal on
credit risk.
For example, the
average annualized asset - weighted returns for
investment -
grade long - term bond funds were 3 percent versus 5.7 percent for the Barclays Capital U.S. Long Government /
Credit Index over five years.