We held exposure to bank loans until recently, as they are higher up in the capital structure, resulting in a lower risk of default. However, we sold these positions as our outlook became more cautious and we neared a potential rate hike that we thought could pose trouble for the space.
In our traditional bond allocation, we have increased credit quality by reducing exposure to corporate bonds in favor of government bonds and mortgage-backed securities. This has increased our overall duration to avoid the shorter end of the yield curve as the Fed raises interest rates. We continue to keep our alternative fixed income allocation diversified with credit exposures to structured product, such as asset backed securities (ABS), commercial mortgage backed securities (CMBS) and residential mortgage backed securities (RMBS). We find these sectors attractive on a valuation basis and the fundamentals remain sound at this time.
Gary Stringer is the CIO, Kim Escue is a Senior Portfolio Manager, and Chad Keller is the COO and CCO at Stringer Asset Management, a participant in the ETF Strategist Channel.
Any forecasts, figures, opinions or investment techniques and strategies explained are Stringer Asset Management LLC’s as of the date of publication. They are considered to be accurate at the time of writing, but no warranty of accuracy is given and no liability in respect to error or omission is accepted. They are subject to change without reference or notification. The views contained herein are not be taken as an advice or a recommendation to buy or sell any investment and the material should not be relied upon as containing sufficient information to support an investment decision. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Past performance and yield may not be a reliable guide to future performance. Current performance may be higher or lower than the performance quoted.
Data is provided by various sources and prepared by Stringer Asset Management LLC and has not been verified or audited by an independent accountant.