High-yield bonds 'fools paradise'

Robert Rodriguez, CEO of First Pacific Advisors, wouldn’t touch high-yield bonds with “a 500- or a 1,000-foot pole.”
JUN 29, 2007
Robert Rodriguez, chief executive officer of First Pacific Advisors, today said he wouldn’t touch high-yield bonds with “a 500- or a 1,000-foot pole.” “It’s a fool’s paradise,” Mr. Rodriguez said during the Morningstar Investment Conference 2007. “I feel fairly confident, or should I say highly confident, that we will witness another period of time where the spreads in high yield will probably end up setting new all-time high records.” That could be in excess of 1,100 basis points over Treasuries, he said. “With what is going on in private equity and the leveraging up there it’s setting up the next catastrophe,” said Mr. Rodriguez, president and chief investment officer of FPA Capital a small/mid-cap value fund, and FPA New Income, an intermediate bond fund. What’s he buying on the equity side? “I’m very aggressively buying a small over-the-counter stock, it’s a symbol called CASH,” quipped Mr. Rodriguez, who has 41% of FPA Capital in cash. Los Angeles-based First Pacific Advisors manages about $11 billion in assets.

Latest News

Mercer Advisors launches Aspen Investing with in-house direct indexing
Mercer Advisors launches Aspen Investing with in-house direct indexing

The $100B-plus mega-RIA is folding custom portfolios, daily tax-loss harvesting and unified managed accounts into its Aspen advisor tech platform

The most valuable professional development opportunities in independent advisory firms are hiding in plain sight
The most valuable professional development opportunities in independent advisory firms are hiding in plain sight

From using projects as strategic thinking exercises to real-world challenges as problem-solving exercises, indie firms can make for more powerful talent incubators.

Financial services faces highest AI exposure of any sector, BCG finds
Financial services faces highest AI exposure of any sector, BCG finds

New BCG research names financial services among the world's most AI-exposed industries and the US as a top-tier AI economy.

Wealth transfer fails when families skip the hard talks
Wealth transfer fails when families skip the hard talks

Rockefeller Capital Management's Mallory Findley on how avoiding conversations risks derailing even the best-laid estate plans.

One in three Americans lose track of old retirement savings after job changes
One in three Americans lose track of old retirement savings after job changes

New Empower research reveals a "retirement drift" problem that hands financial advisors a direct opening to add client value.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor