Fixing the Core Conundrum

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Sponsored by Guggenheim

Within the 2018 version of The Core Conundrum, Guggenheim’s funding group discusses why it believes investing in sectors not included within the Bloomberg Barclays U.S. Combination Bond index is the important thing to producing revenue and enhanced risk-adjusted returns in in the present day’s evolving fixed-income market.

Key takeaways:

Low rates of interest and a benign credit score atmosphere have inspired some traders to achieve for yield by growing length threat, credit score threat, or each.
Traders could also be underestimating the dangers posed by these funding shortcuts, notably as U.S. financial coverage tightens and the top of the credit score cycle approaches.
At $19 trillion, the Bloomberg Barclays U.S. Combination Bond index represents lower than half of the overall U.S. fixed-income universe, leaving out $21 trillion of non-indexed securities.
The group of securities not included or underrepresented within the benchmark index contains structured credit score and floating charge devices, which can supply comparable or larger yields and decrease durations than equally rated company bonds.

 

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