BOSTON, MA, June 12, 2023 — Barbara McKenna, Managing Principal and Portfolio Manager at Longfellow Investment Management, was interviewed by Rob Kozlowski of Pensions & Investments.
In the article, “Bond managers see resurgent interest after being rocked by rising rates,” Barbara discusses the fixed income market over the past few years and how the historic velocity of the interest rate hikes contributed to the negative returns of 2022. “The one good or bad thing about fixed income is when it does really well, it becomes expensive,” she explained. “2022 was really a function of 2020 and 2021 when interest rates plummeted and spreads on credit tightened.”
In 2022, investment managers gave back some of the strong returns they earned previously. As interest rates rose, principal losses started to increase, which is expected; however, the speed at which interest rates change doesn’t typically happen so quickly. These losses now make bonds very attractive, according to Barbara.
“It has been a very long time since we’ve seen this type of yield opportunity in fixed income,” Barbara said. “We certainly see more inquiries regularly as clients want to now lock in [rates], where on many securities in the corporate sector you could get a 5% yield, and they haven’t seen that in decades.”
The full article is available online here.
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Fixed Income investments involve risks such as interest rate risk, credit risk and market risk, including the possible loss of principal. Interest rate risk is the risk that interest rates will rise, causing bond prices to fall. Past performance does not guarantee future results and the opinions presented cannot be viewed as an indicator of future performance.