Not exact matches
And so what Marks is saying is that it
does not matter if your portfolio holds a bunch of, say, «AAA» -
rated corporate bonds and highly -
rated government
bonds like US Treasuries, which are, in theory, highly liquid assets.
Which doesn't cover investments in shares, the returns on which are directly affected by changes in the
corporate tax
rate (or the myriad of other investment vehicles liked
bonds, REITs, mutual fund trusts, etc. that make up the bulk of the universe for Canadian investors).
To
do that, you need to look at
corporate bond funds with a similar duration, which is a measure of sensitivity to interest
rate risk.
@Jerry, I agree that today the main risk in
bonds is duration risk (AKA interest -
rate risk)-- last weekend's Barron's has an interview with the UBS Wealth Management top managers pointing out this means convincing investors to switch from Treasuries and investment - grade
corporates to well - selected junk (HYLD is a jewel there —
DO N'T go for index funds in
bonds, very differently from ones in stocks they make no sense... where's the sense in wanting to lend more to companies which are more indebted?!
We love high yield
corporate bonds; they pay a lot more interest than treasuries and also because these are not the greatest borrowers — I'm not talking little companies; think CitiBank and other very big companies that don't have a pristine credit
rating — they can not lend money out very long so the maturities of our high yield
bond fund is closer in.
IGHG and HYHG
do not attempt to mitigate factors other than rising Treasury interest
rates that impact the price and yield of
corporate bonds, such as changes to the market's perceived underlying credit risk of the
corporate entity.
An investment grade
rating ensures that credit risks are still pretty low, although
corporate bonds won't perform as steadily as government
bonds if the market ever swoons again like it
did in late 2008.
Ranking
corporate bonds and
corporate loans against each other — no one should argue that they
did a bad job
rating them in aggregate.
Here's a graph to show how yields have
done over the last 15 years for various
corporate bond ratings.
Suppose we had seven guys in the room, an economist, a guy from a
ratings agency, an actuary, a guy who
does capital structure arbitrage, a derivatives trader, A CDO manager, and a guy who
does nonlinear dynamic modeling, and we asked them what the spread on a
corporate bond should be.
The fund focuses on
corporate bonds but
does have the flexibility to invest in Treasuries, MBS and other similarly
rated debt securities.
Gold -
rated Lysander - Canso
Corporate Value has delivered fantastic results by pouncing when US and Canadian corporate bonds look cheap and becoming cautious when th
Corporate Value has delivered fantastic results by pouncing when US and Canadian
corporate bonds look cheap and becoming cautious when th
corporate bonds look cheap and becoming cautious when they don't.