Now we have a good-looking strategy! The combined version delivers the best risk adjusted return of any single strategy version while delivering higher income and better capital preservation than the benchmark. The income is generally stable as well, delivering above benchmark income in all market environments. Dare we tempt the fates and see if we can improve? Of course we do, but that will be the subject of a future post.
DISCLOSURES
Investing involves risk, including possible loss of principal. The value of any financial instruments or markets mentioned herein can fall as well as rise. Past performance does not guarantee future results.
This material is distributed for informational purposes only and should not be considered as investment advice, a recommendation of any particular security, strategy or investment product, or as an offer or solicitation with respect to the purchase or sale of any investment. Statistics, prices, estimates, forward-looking statements, and other information contained herein have been obtained from sources believed to be reliable, but no guarantee is given as to their accuracy or completeness. All expressions of opinion are subject to change without notice.
Nathan J. Rowader is a registered representative of ALPS Distributors, Inc.
ASSET CLASS KEY:
Emerging Market Corporates: CS Emerging Markets Corporate Bond Index |
Investment Grade Credit: Bloomberg Barclays U.S. Credit |
Emerging Market Sovereigns: Bloomberg Barclays EM Sovereign |
Mortgages: Bloomberg Barclays U.S. MBS |
Foreign Sovereigns: Bloomberg Barclays Global Treasury ex USD |
Municipal Bonds: Bloomberg Barclays Municipal Bond |
High Yield Credit: Bloomberg Barclays US Corp High Yield |
Short Term Treasuries: Bloomberg Barclays US Treasury 1-3 yr |
High Yield Municipal Bonds: Bloomberg Barclays Muni High Yield |
Treasuries: Bloomberg Barclays U.S. Treasury |
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DEFINITIONS
Credit Suisse Emerging Market Corporate Bond Index consists of U.S. dollar-denominated fixed-income issues from Latin America, Eastern Europe and Asia.
Bloomberg Barclays U.S. Corporate High-Yield Bond Index covers the USD-denominated, noninvestment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below.
Bloomberg Barclays EM Sovereign is a rules-based market-value weighted index engineered to measure the fixed-rate local currency sovereign bonds issued in emerging markets as identified by Bloomberg.
Bloomberg Barclays Global Treasury ex USD is an unmanaged index composed of those securities included in the Barclays Global Aggregate Bond Index that are Treasury securities, with the US excluded while hedging the currency back to the US dollar.
Bloomberg Barclays Municipal Bond covers the USD-denominated, long-term tax-exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and pre-refunded bonds.
Bloomberg Barclays U.S. Credit is an index composed of corporate and non-corporate debt issues that are rated investment grade (Baa3/BBB) or higher.
Bloomberg Barclays U.S. MBS tracks the mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA) and Freddie Mac (FHLMC).
Bloomberg Barclays Municipal Bond covers the USD-denominated, long-term tax-exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and pre-refunded bonds.
Bloomberg Barclays US Treasury 1-3 yr is an unmanaged index of public obligations of the U.S. Treasury with a remaining maturity of one year or more.
Emerging market is a country that has some characteristics of a developed market but does not meet all of the standards to be a developed market.
Max drawdown is the percentage of loss that an asset incurs from its peak net asset value to its lowest value.
S&P 500 Index is an unmanaged index of 500 common stocks chosen to reflect the industries in the U.S. economy.
Sharpe ratio is a ratio developed by Nobel laureate William F. Sharpe to measure how a fund performs relative to the risk it takes.
Standard deviation measures the degree to which a fund’s return varies from its previous returns or from the average of all similar funds.
U.S. Treasurys are marketable U.S. government debt securities with fixed interest rates and maturities.
Yield is the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment’s cost or on the U.S. government’s debt obligations.