Latest Blog: Yellow Flag - 05/10/2022
Investment Insights are written by Angeles' CIO Michael Rosen
Michael has more than 30 years experience as an institutional portfolio manager, investment strategist, trader and academic.
MORE ON RATES...Published: 06-26-2015
A few days ago (Beginning’s End) I suggested 2015 might turn out to be the worst year for bond investors in the past three decades. Here are some additional pictures (courtesy of Goldman Sachs) to quantify the risks.
First we show the principal loss by the end of this year under various scenarios, with yields rising per current expectations or rising to historical means. The consensus expectation is for a loss greater than the current yield. Should yields revert to any of the historic means, losses would be greater.
Before the tears start flowing, though, consider that US investors are likely to see losses much less than our European friends. Germans, for example, could be looking at another 20% loss of value (see Graph below). This is, of course, because US yields are substantially higher than other developed countries. At 2.47% (today), the 10-year Treasury yields more than comparable bonds in Spain or Italy (each with 10-year yields of 2.1%). French OATS yield just 1.2%, German bunds just 0.8% and JGBs 0.5%. The US offers the highest yields in the OECD.
In addition to principal loss should interest rates rise, investors should also pay attention to the froth bubbling up in the high-yield (nee, “junk”) market. Loans with few, or any, covenants are at record levels, multiples ahead of the pace in 2007.
Our advice for bond investors? Caveat Emptor.PRINT THIS ARTICLE
Pressure Building 11-20-2014
Yes, we all know the European economy is not growing: stagnant, sclerotic, etc. But this fact is not a crisis. It's ...READ MORE
Shock, Part 4 (Divided We Are) 12-21-2016
We began this series with a review of the likely economic policies and their implications of the new Trump ...READ MORE
Baseball, more than any other sport, by far, has drawn its share of colorful characters. I don't know why that is, but ...READ MORE
We strive build portfolios of best-in-class investment managers across all asset classes. If you would like to be considered for our portfolios, please contact us using our manager inquiries form.
- MANAGER INQUIRIES
SUBSCRIBE TO ANGELES' INSIGHTS
Get the latest investment information and stay on top of market trends.
How Can We Help You?Institutional Investors
Fully resourced investment office built to manage sophisticated client investment programsPrivate Wealth
Personalized discretionary portfolio and wealth management services powered by institutional processInvestment Management
Rigorous process and a flexible platform designed to meet client needsArticles & Insights
Latest insights and perspectives from the Angeles teamContact Us
Get in touch