Guggenheim Partners’ Scott Minerd explains why he is getting defensive in all six of his five-star-rated bond funds.
WEALTHTRACK Episode #1415; Originally Broadcast on September 29, 2017
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- Global Chief Investment Officer, Portfolio Manager,
- Guggenheim Partners
Is the great expansion soon to become the great unwinding? The recent unanimous decision by Federal Reserve officials to start reducing the size of its bond holdings would indicate it.
The Fed’s balance sheet is up an estimated 500% to $4.5 trillion since the financial crisis because of its massive purchases of treasury bonds and mortgage-backed securities, designed to lower interest rates and thus borrowing costs for businesses, homeowners and consumers alike.
According to The Wall Street Journal, the estimated unwinding of those purchases is expected to be very gradual, initially allowing only $10 billion dollars a month of the bonds to mature without replacing them – a pace to be accelerated later.
The Fed is the first among the major central banks of developed countries to start withdrawing from this unprecedented monetary experiment. The European Central Bank and the Bank of Japan continue to buy bonds to keep their interest rates low in an effort to encourage economic growth.
This week’s guest, Scott Minerd, is a successful fixed income manager who is tracking these developments with interest and concern. Minerd is Co-Founder & Chief Investment Officer of Guggenheim Partners and Chairman of Guggenheim Investments where he oversees $290 billion dollars of assets, two-thirds of which are in fixed income securities. Included in that mix are six taxable bond funds. Each has Morningstar’s top 5-star rating. He is a portfolio manager on all but one. All carry the Guggenheim name. They are the flagship, Total Return, Macro Opportunities, Floating Rate Strategies, Limited Duration, High Yield and Investment Grade Bond.
In a recent report on the outlook for fixed income, Minerd told clients “We have to remind ourselves that we are living in a highly unusual time.” He will discuss what is so unusual about the current state of the fixed income markets and why he is adopting a more defensive strategy as a result.
As always, Minerd will share his “One Investment” recommendation for a long-term diversified portfolio. In my Action Point I’ll discuss the importance of owning a safe haven investment.
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Thank you for watching. Have a great weekend and make the week ahead a profitable and a productive one.
MAKE SURE YOU HAVE A SAFE HAVEN ASSET IN YOUR PORTFOLIO
- Gold: A logical choice
- Universally recognized and traded as safe haven
- Minerd recommends maximum 5% holding
- Jean-Marie Eveillard recommends maximum 10%
- Buying gold is a hassle
- Alternative is gold ETF
- SPDR Gold Shares (GLD)
- iShares Gold Trust (IAU)
No Bookshelf titles this week.
MINERD: VALUABLE EARNINGS
- Bank of America Corporation (BAC)
- Price: $25.31 on 9/28/17
- 52-week range: $14.81 – $25.80
- iShares MSCI Brazil Capped ETF (EWZ)
- iShares MSCI Chile Capped ETF (ECH)
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OUT OF RETIREMENT
Scott Minerd now leads one of the fastest growing investment management firms on Wall Street, overseeing nearly $300 billion of assets including six five-star rated bond mutual funds. It’s a far cry from when he packed it all in and retired at the age of 37. Why did he quit and what brought him back?