In response, companies have issued a record year-to-date amount of high-grade bonds in the U.S., Thomson Reuters data show.
The old allocation model 60% domestic equities and 40% high-grade bonds does not address the opportunities and risks investors face today.
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Corporate bonds followed along: the yield on long-term high-grade railroad bonds in the United States was 3.18% in 1900.
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He expects to reduce the equity percentage to 30% to 40% later this year and move more into high-grade corporate bonds.
The market now expects domestic Japanese Government Bond (JGB) holders to cash out and seek higher yield solace in U.S. Treasuries and other high-grade foreign bonds.
According to Morgan Stanley, high-quality investment-grade corporate bonds are now at their cheapest since 1925.
In the year to date, loans are running in the middle of the pack, trailing equities and high-yield bonds, while beating 10-year Treasuries and investment-grade corporate bonds.
Hence most investors flocked to the next best thing: fixed-income instruments such as investment grade bonds, U.S. Treasuries and even high-yielding junk bonds.
However, we recognize that stocks now appear to be cheap to not only high grade but also higher-yielding bonds.
With returns on American Treasury bonds and high-grade debt too low to meet the needs of pension funds and endowments, they have to take more risks.
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The multitudes of bond haters continue to screech about how overvalued Treasurys and investment-grade and high-yield corporate bonds are, but some split-rated bonds deserve to be in your portfolio.
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Specifically, an Obama victory will stoke fear of higher taxes on dividends and ordinary income, and drive a rotation out of investment grade and high-yield corporate bonds and into municipal bonds.
Active managers in intermediate-term securities fared better than managers in long-term securities, and managers in investment grade bonds fared better than managers in high-yield securities.
However, history tells us that various bonds, say high-yield bonds, Treasuries or Investment Grade Corporates, tend to move together.
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In seeking to achieve its investment objective, the Fund will invest in senior secured loans, high yield corporate bonds and investment grade-rated collateralized loan obligations.
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We looked back over the period stretching from January 1, 1997 to February 29, 2012 to see how movements of stocks, Treasuries and lower-grade fixed income investments like high-yield bonds and bank loans, related to each other.
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This assumes that in retirement the couple switches to a lower-risk, conservative portfolio of government and high grade corporate bonds earning on average a real return of just 3%.
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The JPMorgan Domestic High Yield Index is an index composed of non-investment-grade corporate bonds.
However, investors have been pouring money into corporate bonds of all stripes both high-quality, investment grade and low-quality high yields.
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Emerging market and investment grade bonds have sold off in the last few days, and the dollar high-yield index has plateaued, but European high-yield has remained on course, edging higher.
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