WE WILL ADD TO US JUNK BOND ALLOCATION ON DIPS
Our Multi-Asset Global Allocation Model has been 20% long on US junk bonds since Oct 26, 2009. We have also been 10% long on US Senior Bank Loans. This allocation has not only contributed high single digits yield bu, but also capital gains. Senior Bank Loans have provided 15% capital gains over this period of less than four months. Recently, some of the capital gains on high yield bonds have been lost.
According to Lipper, last week nearly $1 billion was withdrawn from US funds that hold high yield bonds. Spreads from US treasuries have widened by more than 100 basis points since Jan 11 and now stand at nearly 700 basis points as measured by Bank of America Merrill Lynch index.… Please click here or the title below to read more.
February 17, 2010