FOMO in Credit Markets

Yield and strong technicals causing some fear of missing out, says Brian Kennedy, Fixed Income Manager, Loomis Sayles.

In a recent Fixed Income Masterclass with Asset TV, Brian Kennedy, co-portfolio manager on Loomis, Sayles & Company’s Full Discretion team, shared his perspectives on fixed income market fundamentals and opportunities across sectors. Watch this highlights reel for his take on credit markets, including:
  • Solid credit market fundamentals
  • Some FOMO behavior by investors
  • Still more upgrade candidates than downgrades
  • Yield in the corporate space
  • Growing dispersion in investment grade and high yield
  • Securitized credit opportunities
This material is provided for informational purposes only and should not be construed as investment advice. The analysis and opinion expressed represent the subjective views of Brian Kennedy as of January 25, 2024 and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted. Actual results may vary.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.

Fixed income securities may carry one or more of the following risks: credit, interest rate (as interest rates rise bond prices usually fall), inflation and liquidity.

Interest rate risk is a major risk to all bondholders. As rates rise, existing bonds that offer a lower rate of return decline in value because newly issued bonds that pay higher rates are more attractive to investors.

Duration risk measures a bond's price sensitivity to interest rate changes. Bond funds and individual bonds with a longer duration (a measure of the expected life of a security) tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations.

Plus sectors refer to additional fixed income sectors some strategies invest in such as high yield bonds, emerging market bonds, floating rate bank loans, and non-US dollar bonds, to seek greater diversification or yield potential.

Unlike passive investments, there are no indexes that an active investment attempts to track or replicate. Thus, the ability of an active investment to achieve its objectives will depend on the effectiveness of the investment manager.