Fixed income: Little change among bond strategies, with high yield filling 4 of top 10
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • CI Financial launches global real estate, infrastructure joint venture
      Tina Byles Williams
      Xponance, Investcorp link up to give diverse alts managers a boost
      MidOcean taps 2 for investor relations team
      Erik Hirsch
      Russell’s deal with Hamilton Lane about forming ‘strategic partnership’
    • Hub International agrees to buy Plan Sponsor Consultants
      Aon names public markets solution leader
      Deloitte to acquire Sydney-based consulting firm Rice Warner
      Jo Holden
      Mercer picks new global head of investment research
    • Jerome Powell, chairman of the Federal Reserve, listens during a Senate Banking Committee hearing in Washington on Dec. 1, 2020
      Fed saw some time before taper conditions met – minutes
      International Monetary Fund and World Bank spring meetings signage at the IMF headquarters in Washington
      IMF upgrades global growth forecast, warns of diverging recoveries
      A cashier standing behind a protective barrier assists a customer at a Peter Harris Clothes store in Latham, N.Y.
      Job growth tops 900,000 in March as hiring broadens
      Duncan Bonfield, CEO of IFSWF
      Institutional investors putting risk back on the table – report
    • Economic Group Pension Services scoops up third-party administrator
      OregonSaves gathers $100 million in assets
      Treasurer: CalSavers hits 10,000-plus in employer sign-ups
      Wisconsin Deferred Compensation cutting American Beacon fund from lineup
    • 2 standards better than 1 when it comes to ESG reporting – research
      Girls Who Invest aims for diversity
      Investors press Berkshire Hathaway on climate action
      U.K. pension regulator warns plans on climate disclosures
    • Ken Griffin
      Ken Griffin donates $5 million to give Miami students internet
      New book culls institutional wisdom from podcast series
      Fearless Girl
      SSGA’s Fearless Girl statue now shattering glass ceiling
      Tangen video
      Norges chief dons chef’s hat to boost employees’ spirits
    • Hedge funds post best first-quarter return since 2000
      Jason Kephart
      Managers see good times ahead in 2021
      Jev Mehmet, CEO of Brevan Howard's Coremont unit
      Brevan Howard runs $50 billion unit like BlackRock’s Aladdin
      A sign outside a Credit Suisse Group bank branch in Murten, Switzerland
      Credit Suisse, Nomura slump as banks tally Archegos damage
    • CalSTRS puts $1 billion into 2 BlackRock low-carbon strategies
      U.S. bonds have worst quarterly return since 1981
      Norway wealth fund should reduce equity universe – report
      Hedge funds post best first-quarter return since 2000
    • Former Winton executive joins digital asset trading firm
      Michael Dommermuth, chief executive officer of Manulife Asset Management speaks at the Bloomberg Markets Most Influential Summit in Hong Kong in 2015
      Manulife, Samsung Asset Management to cooperate on S. Korea opportunities
      Hamilton Lane puts 3 in charge of fund investment amid promotions
      two businessmen seal deal with handshake over table with documents, laptop, table, smartphone and documents
      Future Planet Capital acquires venture capital firm Midven
    • Pennsylvania State Capitol, Harrisburg
      PennPSERS subject of probe into fiscal-year return data
      Florida Senate bill seeks to close state pension plan to most new hires
      A foreign currency dealer on a telephone in a dealing room of Hana Bank in Seoul
      S. Korea tweaks NPS domestic equity target ranges
      NISA index ticks down in March, as funding gains
    • Former Winton executive joins digital asset trading firm
      Hamilton Lane puts 3 in charge of fund investment amid promotions
      TimesSquare Capital taps ISS veteran for ESG post
      Carl Pettersson
      Finland’s Elo chooses next CEO
    • Hand typing on stationary iPhone at an office reception desk
      Private equity’s taste for tech spurs $80 billion deal spree
      Vista Equity promotes 2 to leadership roles on 2 funds
      Azimut takes minority stake in HighPost
      Bills of euro, dollar and pound currencies, among others
      Ardian acquires Bregal’s stake in Freshstream fund
    • CalSTRS indutrial property
      Investors hungry for industrial properties
      Tim Wang
      GLP names co-president of logistics, industrial real estate for China
      Frank Forster
      StepStone Real Estate adds managing director for Europe
      Christine Iacoucci
      BentallGreenOak promotes from within to fill Canadian CIO role
    • Andy Schreiner
      New PEPs targeting firms without retirement plans
      Jackie Walorski
      Contribution catch-up for caregivers gaining favor
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Neal and Brady
      Retirement security could be only issue both sides accept
    • Corporate pension contributions
      Eddy Awards 2021
      COVID-19: One year in
      Charging Bull, sometimes referred to as the Wall Street Bull or the Bowling Green Bull, a bronze sculpture that stands on Broadway just north of Bowling Green in the Financial District of New York City
      Top-performing managers Q4 2020
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • Q1 2021 searches and hires overview report
      New Jersey hires 2 alts consulants
      CalSTRS puts $1 billion into 2 BlackRock low-carbon strategies
      Phoenix DC plans stick with Morley for stable value
    • Q1 2021 searches and hires overview report
      New Jersey hires 2 alts consulants
      CalSTRS puts $1 billion into 2 BlackRock low-carbon strategies
      Phoenix DC plans stick with Morley for stable value
    • Passive Investment Management Services
      Active Extended Global Credit Manager Search
      Actuarial Services
      Investment Management Services
    • U.S. bonds have worst quarterly return since 1981
      Stable value retains edge over money market funds
      Taiwan Semiconductor’s No. 1 in the emerging markets book
      U.S. fixed-income returns post another positive year
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • CalPERS cartoon
      Urgency underscores CalPERS' search for a CIO
      Multiemployer plans cartoon
      Money — but no fixes — for multiemployer plans
      Vaccination cartoon
      Rallying to meet the ongoing COVID-19 challenge
      Tesla cartoon
      Don’t confuse wealth creation with retirement saving
    • China: the outlook is bright for longer-term investors
      Finding Differentiation in Securitized Assets
      Bipsync Client Stories: RMS in Action at Pensions and Superannuation Funds
      Green and sustainable bonds in emerging markets
    • Greg Shea and Steven Kindred
      Commentary: The solution for yield-seeking allocators may be hiding in plain sight
      Jim Park
      Commentary: Asian Americans, Pacific Islanders face ‘bamboo ceiling’ in money management
      Jared Gross
      Commentary: Anchors and allocations – breaking the grip of 60/40
      Peter Marber
      Commentary: Is it time for an emerging markets rally?
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • P&I Content Solutions
      Research for Institutional Money Management
      P&I Content Solutions
      Top questions for institutional investors
      Sponsored Content By Newton Investment Management
      Growth and Innovation in Emerging Markets
      P&I Content Solutions
      In Challenging Markets, Systematic Global Macro Strategies Could Hold Opportunity
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      1:23
      The passive fixed-income glut
      watch video
      1:38
      Is it time for DC plans to embrace private equity?
      watch video
      5:39
      The coronavirus pandemic: One year later
      watch video
      0:45
      Private funds weathered 2020 turmoil
    • Understanding the PEP Evolution
      Divest or engage?
      New Outlook on Income: A Framework for Evaluating DC Retirement Income Solutions
      Innovations in DC: Helping supercharge retirement outcomes
    • POLL: The Biden infrastructure plan
      POLL: Retirement income solutions
      POLL: Working after the pandemic
      POLL: The year ahead for the 1,000 largest U.S. retirement funds
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • U.S. bonds have worst quarterly return since 1981
      A lost decade for funded status
      Graphic: The passive fixed-income glut
  • Events
    • Conferences
    • Webinars
    • DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Understanding the PEP Evolution
      Divest or engage?
      New Outlook on Income: A Framework for Evaluating DC Retirement Income Solutions
      Innovations in DC: Helping supercharge retirement outcomes
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. MONEY MANAGEMENT
August 19, 2013 01:00 AM

Fixed income: Little change among bond strategies, with high yield filling 4 of top 10

  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Michelle Russell-Dowe said the CMBS strategy benefited from improvements in the real estate market.

    High-yield strategies maintained their dominance among the 10 best performing fixed-income managers for the year ended June 30, according to Morningstar Inc.'s separate account/collective trust database.

    Indeed, there were few changes in the rankings from the previous quarter.

    Four of the top 10 portfolios were high yield, while two were short term, two were ultrashort, one was long government and one was intermediate; the exact same makeup as the prior quarter.

    “The top 10 managers were almost identical, just a different order,” said Andy Kwon, data analyst at Chicago-based Morningstar. “High yield seems to be dominating, but if you drill down into it by corresponding months, it had its lowest periods (in April, May and June) than in the last nine months.”

    The median return for domestic high-yield bonds in the quarter ended June 30 was -1.22%, down from 2.79% in the previous quarter. Meanwhile, the median return for limited duration was -0.45% for the quarter ended June 30, intermediate duration was -2.24%, and long duration was -5.67%.

    The median return among all domestic fixed-income separate account portfolios was 0.94% for the 12 months and -1.93% for the quarter ended June 30. The Barclays Capital Government/Credit index returned -0.62% for the year and -2.51% for the quarter; the Credit Suisse High Yield index returned 9.18% for the year and -1.38% for the quarter.

    “The trend (in fixed income) seems to be moving down, and moving down pretty fast,” Mr. Kwon said. “There are a ton of negative returns, so that's where all the weight is sitting.”

    CMBS at top

    Although high-yield bonds snagged the most spots in the overall ranking, the leader for the year was the commercial mortgage-backed securities composite of New York-based Brookfield Investment Management Inc., with a gross return of 29.65%.

    The strategy ranked ninth in the year ended March 31, with a gross return of 17.02%. (All figures reported in this story are gross returns; data for periods of more than one year are annualized.)

    “Mortgage credit, both residential and commercial, has begun to demonstrate the tremendous value that comes from improvements in the real estate markets and improvements in access to credit,” said Michelle Russell-Dowe, managing director and head of structured products at Brookfield.

    The firm's opportunistic MBS portfolio also made the top 10 list, coming in third with 24.63%.

    Ms. Russell-Dowe said the success of the strategies has mostly come from targeting “regions, properties and borrowers that are now just beginning to see improvements in access to credit.”

    In second place was TCW Group Inc.'s Opportunistic MBS strategy, with a gross return of 27.53%, down slightly from 29.4% the previous quarter.

    The portfolio, which focuses on non-agency residential mortgage-backed securities, did particularly well in the fourth quarter of 2011 by becoming more aggressive with bonds and raising the risk profile as market prices decreased, according to Scott Austin, senior vice president of fixed-income at TCW, Los Angeles.

    TCW had two other portfolios in the top 10: the MetWest AlphaTrak strategy came in fifth with 23.64% and the TCW Securitized Opportunities bond portfolio returned 18.02%, ranking ninth.

    “We've constructed strategies that have little to no sensitivity to interest rates,” Mr. Austin said. “So performance will continue to do well regardless of if interest rates move up or down.”

    Similarly, the fourth place U.S. Index Plus strategy of Western Asset Management Co. won't let climbing interest rates force immediate adjustments to the portfolio.

    “We think the market has overreacted (to interest rates) and we think explicit tightening is a year and a half away, if not more,” said Dennis McNamara, portfolio manager of Pasadena, Calif.-based WAMCO. “So on the front end, we think our strategy is still appropriate.”

    The portfolio, which returned 23.83%, for the 12 months is “different from a traditional bond strategy” in that it uses its equity exposure to invest in ultrashort bonds. While most of the returns for the year ended June 30 came from equity, the remainder came from non-agency mortgages and investment-grade credit. Morningstar classifies it as an ultrashort bond strategy.

    2 newcomers

    There were two newcomers to the top 10 list for the periods ended June 30: Manulife Asset Management's high-yield fixed-income strategy, in eighth place with 18.49%; and Advisors Asset Management's credit opportunities high-yield bond strategy, ranking 10th with 16.02%.

    For the five years ended June 30, TCW's securitized opportunities strategy came in first with an annualized return of 22.47%, while the firm's opportunistic MBS strategy came in third with 14.89%.

    The only other crossover from the one-year ranking was Brookfield's CMBS composite, which came in eighth at 13.5%.

    The median 5-year return among all fixed-income separate account strategies was an annualized 5.9%. The BarCap Capital Government/ Credit index returned 5.29% for the same period.

    In second place for the five years ended June 30 was Reams Asset Management Co. LLC's long-duration fixed-income portfolio, with 15.26%.

    “The five-year period includes some interesting market environments, including the financial crisis and the European crisis,” said Mark Egan, managing director of Columbus, Ind.-based Reams. “We've used a lot of market volatility to our advantage, mostly in long credit.”

    In the past six months, however, Mr. Egan said the firm has dialed back to a lower risk portfolio, because investors are “not being compensated right now to take too much risk.”

    Rounding out the top five were Braver Capital Management's tactical high yield bond with 14.67%, and Clark Capital Management Group's Navigator fixed-income Treasury portfolio with 14.17%.

    For collective investment trusts, the top performing strategy was Amalgamated Bank's ultra construction loan strategy, with a one-year return of 12.62%, followed by Brandywine Global Investment Management's credit opportunity fund at 11.74%.

    Rounding out the top five were J.P. Morgan Chase's high-yield fund, with 9.95%; Pyramis Global Advisors LLC's leveraged loan pool strategy at 9.9%; and Neuberger Berman's high-yield bond fund at 9.16%.

    The median return among CITs for the year ended June 30 was 0.45%, and for the five years, 5.72%.

    All of the data for Pensions & Investments' quarterly “Top Performing Managers” report are provided from Morningstar Inc's global separate account/collective investment trust database. For information on the database, please contact [email protected] or call (312) 384-4087.

    Related Articles
    Equities: Small caps dominate with a solid second quarter; 2 strategies repeat …
    Equities: Small caps dominate with a solid second quarter; 2 strategies repeat …
    Index funds, high yield are hot, GTAA is not, since 2009 — survey
    Recommended for You
    Former Winton executive joins digital asset trading firm
    Manulife, Samsung Asset Management to cooperate on S. Korea opportunities
    Manulife, Samsung Asset Management to cooperate on S. Korea opportunities
    Hamilton Lane puts 3 in charge of fund investment amid promotions
    Top questions for institutional investors
    Sponsored Content: Top questions for institutional investors
    sponsored
    Events
     
     
    Sponsored
    White Papers
    COVID-19 Makes LP Portfolio Management More Important Than Ever
    Green and sustainable bonds in emerging markets
    Finding Differentiation in Securitized Assets
    Bipsync Client Stories: RMS in Action at Pensions and Superannuation Funds
    Portfolio Protection: One Size Fits None
    China: the outlook is bright for longer-term investors
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    April 5, 2021 Page One

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center