Four rules for credit investing in these chaotic times - Wealth Professional | Canada News Media
Connect with us

Investment

Four rules for credit investing in these chaotic times – Wealth Professional

Published

5 years ago

 on


Castle has offered a roadmap for credit investing in these chaotic times and volatile times, which is shaped by Pender’s investment process and guiding principles.

1, Keep the shape of the fund
“In order to have the ability to take advantage of opportunities as they present themselves, as well as to keep investor confidence in the Fund, it is important to maintain the ‘shape’ of the fund in terms of our weighting by risk tier. Tempting as it may be to ‘back up the truck’ on deeply discounted bonds, we need to preserve liquidity and flexibility by continuing to hold strong weightings in cash, government bonds and low default-risk securities.”

2, Manage for long-term fund holders
“Volatile markets bring the potential for broker quoted bond prices to differ materially from executable prices. Therefore, it is especially important in these times to promote full price discovery on the fund’s holdings, regardless of whether doing so has a short-term negative impact on the fund NAV. We believe a rebound in the NAV will come eventually. But, in the near term, the fund’s price should not be artificially flattered by stale prices, or by prices that reflect our disproportionate buying activity. Purchasers need to know they are buying a high-integrity NAV.”

3, Buy the markets the Fed is buying
“These are extraordinary times for central bank market interventions. Numerous markets that had not previously been subject to direct Federal Reserve purchases are now at least partially backstopped by a buyer with theoretically infinite purchasing ability. Recent history has shown that major central banks can be successful in moving prices in markets that they are supporting. The Fed supported markets are not the only interesting markets right now, but central back activity does change the risk:reward equation in certain high priority credit areas such as investment grade corporates and municipal bonds. And who are we to fight the Fed?”

4, Be aware of the potential to be layered by senior debt
“While there are many low prices available in corporate credit, not every discounted bond is attractive. Even a strong corporate balance sheet may look much worse after months of drastically reduced revenues. We believe it is a good approach to focus on the most senior series’ of debt, given that many companies are drawing down credit facilities to fund losses as opposed to funding productive assets. Senior debt may outperform subordinated debt coming out of the crisis if the subordinated debt has been layered by large revolvers or senior liens.”

Let’s block ads! (Why?)



Source link

Related Topics:
Continue Reading

Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

5 days ago

 on

October 16, 2024

By

 

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

1 week ago

 on

October 11, 2024

By

 

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

S&P/TSX composite little changed in late-morning trading, U.S. stock markets down

Published

2 weeks ago

 on

October 10, 2024

By

 

TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.

The S&P/TSX composite index was up 0.05 of a point at 24,224.95.

In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.

The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.

The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.

The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.

This report by The Canadian Press was first published Oct. 10, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending

Exit mobile version