Tag Archives: High Yield

Jul 16, 2020

As ETF Fund Flows Surge, Don’t Fight the Fed’s Passive Investing Philosophy

Investing legend Marty Zweig famously declared, “don’t fight the Fed.” With the Fed now buying fixed income ETFs and fund flows of index-based ETFs surging, Marty’s advice is proving timely. In this blog post, we review key index-based product performance leading up to the Fed’s intervention and detail the ETF fund flows that followed. Back…

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Apr 30, 2020

Durability During Distress

Income-seeking investors have always had to compromise between the level of dividend payments and the safety of dividend payments.   The importance of this tradeoff has recently gone viral, as governmental actions in response to COVID-19 have suppressed global economic activity, causing many companies to suspend or reduce their dividend payments. Launched in 2005, the S&P…

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Apr 1, 2020

Delivering Low Volatility Exposure to High Yield Bonds

The last few weeks have been challenging for business the world over. People working from home and aggressive social distancing have led to business contraction and the expectation of rising default. On March 19, 2020, an S&P report expected that the U.S. trailing 12-month speculative-grade corporate default rate would rise to 10% within the next…

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Sep 13, 2019

The Outperformance of the S&P U.S. High Yield Low Volatility Corporate Bond Index since Q4 2018

The S&P U.S. High Yield Low Volatility Corporate Bond Index[1] is designed as a low volatility strategy in the high yield bond universe. The index aims to deliver higher risk-adjusted returns than the underlying broad-based benchmark through mitigating uncompensated credit risk. The back-tested index performance demonstrated the efficacy of the low volatility strategy, with reduced…

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Sep 9, 2019

S&P High Yield Dividend Aristocrats Part I: Strategy Characteristics

With the 10-Year Treasury yield around just 1.5% and the potential for more interest rate cuts on the horizon, yield-seeking investors may become more interested in equity dividend yield strategies. Dividend strategies can satisfy investors’ needs in several regards, namely higher dividend income, favorable risk-adjusted returns, lower volatility, and more downside protection in bearish market…

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Aug 12, 2019

Potential Applications of the Low Volatility High Dividend Concept in Brazil

Historically, the percentage of dividend payers in Brazil has ranged between 71% and 87%,[1] making it a propitious environment for implementing dividend-focused strategies. The highest-yielding stocks in high-yield strategies often come with greater portfolio volatility,[2] and Brazil is no exception. This blog explores the rationale behind the implementation of a low volatility high dividend strategy…

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Aug 7, 2019

Defensiveness of the Credit Strength Strategy in U.S. Corporate Bonds

Our fundamental credit strength strategy uses credit ratios to screen out issuers with risky credit profiles and construct corporate bond portfolios with strong credit quality (for a detailed methodology, please see our previous blog). Our research shows that a credit strength strategy can potentially reduce return volatility and improve drawdowns. Our goal in this blog…

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Jul 23, 2019

The Heat Is On for High Yield in July

All bonds are not the same, and when it comes to high yield they can be more like equity than fixed income at times. High yield’s lower credit ratings and reliance on funding add risk, and some investors have relied on this asset class over the past couple of years in search of yield. An…

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Aug 22, 2018

Puerto Rico Bonds: A Surging Force

After wreaking havoc on the municipal bond markets, Puerto Rico bonds have recently been adding value through their recovery. Bonds rallied after the latest debt restructuring deal was struck between the commonwealth and the bond holders. Additional supporting news, as mentioned in an article from Reuters,[1] was a federal court ruling affirming the budgetary powers…

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Mar 28, 2018

Performance Analysis of the S&P High Yield Low Volatility Corporate Bond Index for 2017

The S&P U.S. High Yield Low Volatility Corporate Bond Index (the HYLV index) was launched on Dec. 20, 2016, with the aim of capturing high yield bonds with less credit risk and lower return volatility than the broad investment universe of U.S. high yield bonds. One year after the index launch date, we present a…

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