Seeking higher returns and protection against an eventual rise in interest rates, investors have been turning to non-traditional “unconstrained” bond funds. According to Morningstar, nontraditional bond fund assets have more than doubled to a record $151.5 billion last year, from $62.5 billion in 2011.
On this week’s WEALTHTRACK, an exclusive interview with an award winning portfolio manager who is an expert in this field. Dan Roberts of the five star rated MainStay Unconstrained Bond Fund explains why investment flexibility is so critical in today’s complex markets.
WEALTHTRACK Episode #1145; Originally Broadcast on May 01, 2015
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- Co-Portfolio Manager,
- Mainstay Unconstrained Bond Fund
Ever since the financial crisis we have been talking about the unprecedented steps central banks have taken to pump money into the world’s financial system, thereby lowering interest rates and making borrowing more affordable to companies and countries.
The trend continues. The balance sheets of major central banks have exploded since pre-financial crisis days: up more than 500% at the Federal Reserve, nearly 500% at the Bank of England, nearly 300% at the Bank of Japan and almost 200% at the European Central Bank.
One of the consequences of these policies has been to lower interest rates, which simultaneously drives up the prices of bonds. By just about any measure bonds are expensive, and their yields around the world are historically low.
That combination challenges the primary reasons for owning bonds, their income and price stability. It’s also created a serious dilemma for investors – what to do with their bond portfolios?
One answer is to consider nontraditional bond funds, also commonly known as “unconstrained”. These are fixed income funds that can invest just about anywhere in the world, in many cases can invest in other asset classes like stocks and can go short. They have become very popular with investors searching for higher returns and protection against an eventual rise in interest rates. According to Morningstar, nontraditional bond fund assets more than doubled last year to a record $151 billion from $62.5 billion in 2011.
This week on WEALTHTRACK we have an exclusive interview with Dan Roberts, a portfolio manager of one of the highest rated nontraditional bond funds. Roberts is Co-Portfolio Manager of the MainStay Unconstrained Bond Fund which carries a five star rating by Morningstar and has for the second year in a row received a Lipper Fund award for its “consistently strong risk–adjusted performance relative to its peers”. Roberts, a PhD economist is the Head and Chief Investment Officer of Global Fixed Income at MacKay Shields which he joined in 2004. His bond team has been together for more than 20 years and has specialized in managing asset allocation funds, high yield bond portfolios and also long/short strategies which have recently become widely used in the nontraditional bond fund category.
MacKay Shields is a wholly owned, but independently run subsidiary of WEALTHTRACK sponsors’ New York Life MainStay Investments, but Roberts is on the show because of his recognized track record.
If you can’t join us for the show on public television this week, you can always watch it on our website over the weekend. In our exclusive web EXTRA feature, we asked Roberts how his early career in government has influenced him as an investor.
You can also connect with us on Facebook or Twitter. As always, we welcome your feedback on everything we are doing.
Have a great weekend and make the week ahead a profitable and productive one.
CHECK OUT ESTABLISHED ACTIVELY MANAGED BOND FUNDS
BOND FUND MANAGER OUTPERFORMANCE
- 3 years 71%
- 5 years 70%
- 10 years 56%
STOCK FUND MANAGER OUTPERFORMANCE
Percentage of Non-Index Stock Fund Managers that Outperform S&P 500 Index
- 3 years 29%
- 5 years 20 %
- 10 years 27 %
No Bookshelf titles this week.
ROBERTS: EUROPEAN OPPORTUNITY
Consider currency-hedged European equities
A Morningstar favorite:
WisdomTree Europe Hedged Equity ETF (HEDJ)
[tab] No stock mentions in this episode.[/tab]
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[tab]This is Dan Roberts first appearance on WEALTHTRACK
PhD economist Dan Roberts, Portfolio Manager of the award winning MainStay Unconstrained Bond Fund, didn’t start out on Wall Street. Early in his career he served at the U.S. Securities and Exchange Commission, at The White House with the President’s Council of Economic Advisors, and was Executive Director of the U.S. Congress Joint Economic Committee. We asked him how his government service influenced his investment career.