Where to find yield for investors

Jun 10, 2014 @ 12:00 am

Runtime: 2:12

Portfolio managers describe their strategies for finding clients yield, laying out which sectors they prefer given the current market conditions.

Video Transcript

[MUSIC] When investors are looking for yield, I think emerging markets is a very important answer to the, to the yield question. And but my strongest opinion is that, if they're looking to emerging markets for yield, it should be in an unconstrained form. In other words, they should look for completely unconstrained bond funds. The reason is, that in risk off periods, and in periods of economic instability, local currency bonds can come under tremendous pressure. And so if you wanna maintain your exposure over the long run, you don't wanna be subject to the kind of volatility you have in local markets. And so the portfolio manager should be able to maintain his exposure to emerging market's bonds, without that volatility. In terms of finding attractive yield in the current market, we would look at the high yield municipal market, 'cuz you don't have to go very far, you don't have to go overseas and be able to spell Kiev. That you can find here, right here, in your own backyard. We're seeing attractive income opportunities in the senior housing sector, in charter schools. These are all very attractive opportunities that we can properly analyze and that are giving you, you yields in the range of 5 to 6%, which, as you know, on a pre-tax basis could be approaching double digit deals. Well I think if they're looking at improving their portfolios, they should be looking for a total return as opposed to just yield. Looking at cap appreciation on everything, and also look at the things that are very different than the norm or the mainstream that everybody else is looking at. In the alternative space, but more in things that people sometimes consider as hedge funds even though they're not hedging. Such as long short strategies but only certain ones. Fixed income arbitrage merger arbitrage, insurance linked securities possibly, pharmaceutical royalties and things like that. [MUSIC]


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