Insights

May 25, 2020

Small Growth passing baton to Small Value

Small value equities are valued -38% below their 10-year average, while growth, defensive, low volatility, and ESG factors exceed the bubble threshold of +30%. This dispersion has reached a 20-year high, in line with the dot-com bubble.

Profile picture for user J Paulo Silva
J Paulo Silva
Portfolio Manager
April 16, 2020

Fallen Angels & the Fed

April 30th will see record fallen angel bonds move out of investment grade indices, more than the entirety of 2009. In response, the Fed has expanded its credit facilities to purchase fallen angels and HY ETFs.

Profile picture for user Peter Duffy
Peter Duffy
Portfolio Manager
March 31, 2020

Crisis Period Entry Points

Credit spreads peaked at 10.87% so far in the COVID-19 crisis. Spreads above 10% have occurred in 16 months over the last 25 years. In those 16 periods, high yield bonds have outperformed other asset classes, even stocks, over the 3 years that followed.

Profile picture for user David Jackson
David Jackson
Portfolio Manager
March 23, 2020

Spreads Above 700, Now What?

High yield bond spreads are 10.71% vs treasuries as of 3/25/20, elevated above the historical median of 4.89% due to macroeconomic uncertainty.

Profile picture for user David Jackson
David Jackson
Portfolio Manager
February 5, 2020

Top Ranked of 18,323 Indices

Short duration BB-B bonds continue to exhibit top ranked risk-return. To illustrate the extent of this anomaly, we’ve compared the ICE BofA BB-B 1-3Y index to every market index within the Morningstar Direct database.

Profile picture for user Peter Duffy
Peter Duffy
Portfolio Manager
December 16, 2019

Loan Alpha from Capacity Constraint

A loan fund’s size and investment opportunities are negatively correlated. This makes capacity constraint a key factor, allowing for high conviction focus on quality opportunities.

Profile picture for user David Jackson
David Jackson
Portfolio Manager
November 20, 2019

Short Duration's Trojan Horse

Short duration bonds have a Trojan horse. Long maturity bonds often masquerade as short duration. With a minor price change, a short duration bond with a long maturity can become long duration, revealing far more risk than originally indicated.

Profile picture for user Peter Duffy
Peter Duffy
Portfolio Manager
November 12, 2019

Equity's Credit Blindspot

Equity has a credit blind spot. 95% of Russell 3000 companies issue debt, 75% of which is sub-investment grade. Equity investors study stock price movements but often ignore credit market signals.

Profile picture for user Joe Maguire
Joe Maguire
Portfolio Manager