The 10th of June, we hosted our first Fixed Income Seminar in New York. Here are the highlights from the day.
The fixed income presentations overall were a diverse and enlightening overview of different aspects of the credit markets. From reviewing companies’ creditworthiness; to the use of analytics in the bond markets; to how to invest in the fixed income markets; and an overview of the value of indices in the credit markets the presenters provided a detailed summary of how sophisticated investors outline and weigh the investment opportunities in complex credit markets.
Rieger Report (JR Rieger) – JR gave a very enlightening summary of the current investment opportunities in the bond market. He gave an overview on the current market environment relating to investing in global bonds, mentioning the geopolitical risks and extremely low interest rates and the uncertainty about recession as a driver for this market. He outlined and recommended that retail investors that do not understand the market should not buy bonds directly and should use ETFs and other managed investment vehicles. Institutional investors that understand the market can decide what investments suit them the best and they can look at ETFs inflows and outflows in fund types like high yield, investment grade, and emerging markets to help in investment decisions.
Fite Analytics (Geoff Fite) – Geoff gave a compelling argument that without analytics and technology, you cannot and should not participate in the capital markets. The changing environment for technology and the ability to take raw data and analyze it across all market sectors is a driver, and it is critical to have a company that can support all these areas. Regulatory and Compliance changes are coming to the fixed income markets which have been traditionally a laggard for regulation. He predicts that we are in a new phase that the market will demand new products and additional oversight that will increase the demand for analytics.
Gimme Credit – George DeFendini, Dave Novosel and Evan Mann
The team from Gimme Credit spoke about their individual roles at Gimme Credit and gave a concise and informative summary of these roles and the inter-working of the company. They describe their daily credit reports and how they analyze a company’s ability to access the credit market. They spoke about both high yield and investment grade bond issuers and how they review and outline for investors the creditworthiness of investing in individual corporate bond issuers. Investing and accessing the value and the ability for an issuer to cover interest and principal payments is not as simple as you think and companies like Gimme Credit add value for potential investors to determine if these companies are worthy of this risk.
S&P Dow Jones Indices – Chuck Mounts gave an overview of indices and outlined the differences between fixed income and equities in market sizing, flows and performance in indexing and ETFs. He gave an assessment on both equities and fixed income investing in funds over the last couple of years. Risk assets, including corporate bonds, struggled in 4Q18, only to rebound strongly in 1Q19, where volatility was the most pronounced in the lower-quality segments of the market. He noted that even with the volatility in risk assets, corporate credit outperformed equity in both total and risk-adjusted terms over the last year. While allocations to passive vehicles in fixed income still lags the aggregate levels seen in equity markets, the growth rate in fixed income passive vehicles has been surging, with investment in high-quality securities (governments) doing particularly well in light of the uncertainty in the markets.
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