What's in the News:
In November, several high yield, non-investment grade “junk bonds” declined, causing concern about the high yield bond market. Consequently, ETF’s that buy high yield bonds have seen price declines, for example, iShares iBoxx High Yield Corporate Bond ETF (HYG) had a six day decline, and SPDR Bloomberg Barclays High Yield Bond ETF (JNK) declined for 10 of the 11 trading sessions, according to MarketWatch.
In the article, Deutsche Bank’s Chief International Economist, Torsten Slok, states he believes the market decline stems from deteriorating earnings in the telecommunication, healthcare, and retail markets. And while Mr. Slok believes this is not a signal of an impending recession or economic slowdown, market participants seem to be cutting their exposure to high yield debt.
What are we thinking?
As investors hunt for yield in this low interest rate environment, junk bonds have become an attractive option. But as the risk-reward dynamic changes, junk bonds can become less attractive. At Roosevelt, we take a risk conscious approach to income generation and invest in investment grade corporate bonds and preferred securities. CIP is designed to provide high income without taking excessive risk in a low rate environment as well as benefit from a rising rate environment.
This information is intended solely to report on investment strategies and opportunities identified by Roosevelt. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. References to specific securities and their issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Please contact us at 646-452-6700 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions, or if you would like to request a copy of our Code of Ethics. Our current disclosure statement is set forth on our Form ADV Part II, available for your review upon request, and on our website, www.rooseveltinvestments.com.