In August's leading posts, Larry Cao, CFA, receives a blockchain update, Julie Hammond, CFA, considers the state of fixed income, and Clare Flynn Levy shares tips for succeeding as a portfolio manager.
Whatever their motivations, spin-offs can have a dramatic effect on the performance of the associated corporate bonds, so it is crucial that fixed-income investors conduct the necessary analysis. Nathan N.J. Grant, CFA, has some advice.
The financial crisis of 2008–2009 highlighted weaknesses in the way banks calculated both their capital ratios and risk-weighted assets (RWAs). Prior to the crisis, banks held too little capital on their balance sheets and did not hold enough liquid funds. These shortcomings led the banks to have large write-downs during the crisis, which in many cases required state intervention to allow the banks to remain solvent.
Jason Voss, CFA, looks at US Treasury yields, the flood of new corporate debt issuance, the emerging market resurgence, and other fixed-income surprises from 2014.
Over time, the annualized return of a duration-targeting, investment-grade corporate bond portfolio will nearly match its initial yield. A high-yield bond portfolio’s performance is not similarly predictable, according to Martin Fridson, CFA.
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