If an issuer redeems its debt securities prior to final maturity, a fund may have to replace those securities with
lower yielding securities, which could result in a lower return.
But this can drive the prices of these bonds up, making them expensive relative to
lower yielding securities.
But this can drive the prices of these bonds up, making them expensive relative to
lower yielding securities.
«I've held the contention that as you see slower growth (the banks are) going to have to reposition your balance sheet into
lower yield securities.
First, the chief investment officer called to ask what I was doing buying such
low yielding securities.
If an issuer exercises these provisions in a declining interest rate market, the Fund would have to replace the security with
a lower yielding security resulting in a decreased return for investors.
Not exact matches
In the short - term, however, this increased leverage may actually be bullish for junk bonds, corporate bonds, emerging market debt and mortgage - backed
securities as it brings higher prices and
lower yields, he said.
With the Fed actively buying
securities on the open market, the additional demand means bond issuers can promise
lower yields and still attract investment.
Therefore, the price risk of fixed income
securities is
low, and in turn the incremental
yield over cash is worth the risk of an extra 10 % allocation.
While it's better to invest than keep money under a mattress, buying risk free
securities, such as guaranteed income certificates or
low -
yielding government bonds, could actually be riskier than purchasing higher returning products, says Ted Rechtshaffen, president and CEO of Toronto's TriDelta Financial Partners.
debt obligations of the U.S. government that are issued at various intervals and with various maturities; revenue from these bonds is used to raise capital and / or refund outstanding debt; since Treasury
securities are backed by the full faith and credit of the U.S. government, they are generally considered to be free from credit risk and thus typically carry lower yields than other securities; the interest paid by Treasuries is exempt from state and local tax, but is subject to federal taxes and may be subject to the federal Alternative Minimum Tax (AMT); U.S. Treasury securities include Treasury bills, Treasury notes, Treasury bonds, zero - coupon bonds, Treasury Inflation Protected Securities (TIPS), and Treasur
securities are backed by the full faith and credit of the U.S. government, they are generally considered to be free from credit risk and thus typically carry
lower yields than other
securities; the interest paid by Treasuries is exempt from state and local tax, but is subject to federal taxes and may be subject to the federal Alternative Minimum Tax (AMT); U.S. Treasury securities include Treasury bills, Treasury notes, Treasury bonds, zero - coupon bonds, Treasury Inflation Protected Securities (TIPS), and Treasur
securities; the interest paid by Treasuries is exempt from state and local tax, but is subject to federal taxes and may be subject to the federal Alternative Minimum Tax (AMT); U.S. Treasury
securities include Treasury bills, Treasury notes, Treasury bonds, zero - coupon bonds, Treasury Inflation Protected Securities (TIPS), and Treasur
securities include Treasury bills, Treasury notes, Treasury bonds, zero - coupon bonds, Treasury Inflation Protected
Securities (TIPS), and Treasur
Securities (TIPS), and Treasury Auctions
If you plan to hold to maturity you have to be willing to forego the possibility of higher
yields assuming rates rise, but then again you don't get dinged on the
lower price of the
security.
High -
yield funds may invest in
lower - quality
securities, which generally offer higher
yields, but also carry more risk.
The potential counter weights that could cap the 10 - year
yield would be a negative stock market reaction that drives investors to bonds;
lower interest rates outside the U.S. that make the U.S. debt relatively more attractive, and good demand for longer - dated
securities from insurers and others.
Lower yields Treasury securities typically pay less interest than other securities in exchange for lower default or credit
Lower yields Treasury
securities typically pay less interest than other
securities in exchange for
lower default or credit
lower default or credit risk.
Although the bond market is also volatile,
lower - quality debt
securities, including leveraged loans, generally offer higher
yields compared with investment - grade
securities, but also involve greater risk of default or price changes.
With Group of Seven (G7) sovereign bond
yields at historically
low levels, some income - seeking investors have turned to higher - volatility
securities like dividend - paying stocks in an attempt to capture additional income.
•
Lower - quality debt
securities generally offer higher
yields but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer.
Investing in higher -
yielding,
lower - rated, floating - rate loans and debt
securities involves greater risk of default, which could result in loss of principal — a risk that may be heightened in a slowing economy.
Some home improvements, like a new roof or
security system, may also
yield lower insurance premiums.
As
yield - starved investors looked for relatively safe alternatives to
low -
yielding Treasury
securities, they turned to mortgage
securities, which had to - date never experienced major losses.
Japan's recession left little demand at home, so its banks developed the carry trade: lending at a
low interest rate to arbitrageurs to buy higher -
yielding securities.
The
yield required for a
low - risk bond such as a Treasury
security will be
lower than the
yield required for a high - risk bond such as a junk bond.
In recent months, the
yield on US corporate bonds, especially investment - grade
securities, is a little more than 100 basis points compared to the
yield on government debt, dropping within striking distance of the
lows seen post the 2008 financial crisis.
Lower yields - Treasury securities typically pay less interest than other securities in exchange for lower default or credit
Lower yields - Treasury
securities typically pay less interest than other
securities in exchange for
lower default or credit
lower default or credit risk.
Therefore, the investment proposition for
low -
yielding sovereign and other fixed - income
securities is highly dubious in our opinion, another bubble waiting to implode.
The current
low interest rate environment globally has pushed the majority of fixed income
securities to record -
low yield levels across the board.
However,
yields on longer - term
securities could be trending down sometimes when market interest rates are set to get
lower for a foreseeable future to accommodate ongoing weak economic activities.
With
lower demand for shorter - term
securities, their
yields actually go up, giving rise to an inverted
yield curve when
yields on longer - term
securities have come down at the same time.
When the economy is heading to a recession, knowing interest rates are to trend
lower, investors are more willing to invest in longer - term
securities immediately to lock in current higher
yields.
This, in turn, increases the demand for longer - term
securities, boosting their prices and further
lowering their
yields.
The Oakmark Equity and Income Fund invests in medium - and
lower - quality debt
securities that have higher
yield potential but present greater investment and credit risk than higher - quality
securities, which may result in greater share price volatility.
As a Defined Maturity fund approaches its liquidation date, the fund's
securities will mature and the fund may reinvest the proceeds in money market
securities with
lower yields than the
securities previously held by the fund.
Inflation expectations, as measured by the difference between
yields on 10 - year nominal Treasury notes and Treasury inflation protected
securities (Tips), have risen to 2.25 per cent from a
low of around 2.10 a month ago.
Quantitative easing is a process via which the Fed purchases mortgage - backed
securities (MBS) and other bonds in the open market in order to
lower bonds
yields and everyday mortgage rates.
This is not unlike the dilemma facing many retirees and other individual investors: holding ultra-safe interest - bearing investments is wise past a certain age; yet when
yields are
lower than the inflation rate, this strategy erodes buying power and undermines long - term financial
security.
When the
yields on the
securities in which money market mutual funds invest are quite
low, the
yields that the funds are passing along to their shareholders are also quite
low.
High
yields reflect the higher credit risk associated with these
lower - rated
securities and, in some cases, the
lower market prices for these instruments.
Yields available on high - quality
securities continue to remain
low but are somewhat offset by increases in average investment balances.
One of the good things about global uncertainty is that investors seek the
security of bonds, thereby
lowering bond
yields.
Atomic clocks of the previous generation, with significantly
lower precision, are currently being used in applications including satellite navigation systems, high - capacity wireless networks (wi - fi), ensuring the
security of bank communications, and also taking measurements of the Earth's gravitational field,
yielding insight into its internal geological structure.
As a defined maturity fund approaches its liquidation date, the fund's
securities will mature and the fund may reinvest the proceeds in money market
securities with
lower yields than the
securities previously held by the fund.
One of the oldest tricks in the game is to offer a high current
yield, where the
yield can get curtailed through early prepayment (typically in
low interest rate environments), or some negative event that forces the
security to change its form, such as when a stock price falls with reverse convertibles.
I once was a mortgage bond manager, and I bought senior
securities because the
yield spreads on the
lower - rated
securities were so small.
We can (and have) capitalized on a wide range of opportunities in the bond market, including in higher and
lower quality bonds, strategic and high -
yield bonds, floating - rate
securities and even total - return funds, which aren't fully invested in bonds.
Remember that these bouts of QE, LTRO operations, and other interventions have essentially had their effect by squeezing interest rates to levels that are so
low that investors feel forced to seek higher risk
securities in a search for
yield.
The Flexible Income and High
Yield Funds may invest in
lower - rated and non-rated
securities presents a greater risk of loss to principal and interest than higher - rated
securities.
Lower ‐ quality fixed income
securities, known as «high
yield» or «junk» bonds, present greater risk than bonds of higher quality, including an increased risk of default.
If a discount does occur, investors can profit from the discounted price and also gain
yield benefits from a
lower price on income paying
securities.
Although the bond market is also volatile,
lower - quality debt
securities including leveraged loans generally offer higher
yields compared to investment grade
securities, but also involve greater risk of default or price changes.