According to Rick Leader, chief investment officer for BlackRock’s global bonds, there are many incomes in the bond market these days, but not only brings solid yields, but also bargains. But there is. Rieder recently began adding long-term companies to his iShares Flexible Income Active ETF (BINC). There is a net expense ratio of 0.4%. Overall, spreads are tough and expensive for investment grade companies. The spread measures the difference in yields from other bond assets of the same maturity as the Treasury. For example, if you are looking at the curve further, for about 20-40 years, that’s not necessarily the case. “They trade in dollars for 60, 70, 80 cents,” the leader said in an interview with CNBC. “It’s a good asset. Investment grade companies are not the default.” He also locks yields at around 5% to 6%. Binc 1y Mountain has used flexible income active ETFs over the past year. Companies with longer dates are knocked down because they are more sensitive to interest rates. As the January consumer price index reading comes on Wednesday, Federal Reserve Director Jerome Powell said before Congress that the central bank will “still have yet to cut inflation to a 2% target.” It’s not there,” he testified. According to the CME FedWatch tool, the Fed did not change interest rates at its January meeting, and the market expects its market to not expect changes at its March meeting. Meanwhile, the supply of bonds is relatively limited for longer-dated assets, but still has some demand, the leader noted. “Companies want to issue shorter on a yield curve, as opposed to payments. Pensions, life insurance companies need long bonds,” he said. According to the fund’s website, BINC’s long-dated investment grade holdings include bonds from Amazon and Apple. “Sweet Spot” is still a long-term investment-grade company that makes up only a small portion of its leadership funds, and overall investment-grade debt consists of 12.6% of the fund. Just 3.6% of that is on US credit. Instead, ETFs are leaning towards what leaders call high-quality assets in Europe and the US, which is less subject to long-term interest rate risk. “Good (quality), but not great,” he emphasized. “A great deal too rich” BINC focuses primarily on debt maturities between 0 and 5 years, with leaders calling two and three years “sweet spots.” High-yield bonds and loans account for nearly 41% of BINC, about 18% in European and UK assets and 23% in US assets. Leaders like high yields of BB ratings in the former, while B is rated in the latter. He said the European economy will grow slowly enough that the European Central Bank can adjust. Its high yield market is small and companies have good credit quality, he added. The second largest allocation is a securitized product at just under 37%. The obligation for secured loans is 11%, securities supported by commercial mortgages is 10%, MBS other than institutional is about 10%, and asset-backed securities is 5.5%. “The (CLO) market has not yet developed enough to buy triples at a very attractive level,” the leader said. Meanwhile, the CMBS market has been reduced due to concerns about office real estate, he said. “The truth is, like accommodation, a fully leased Class A office is attractive,” the leader said. “You’re getting paid for taking a bit of risk in an area where people feel they’re under some pressure.”
BlackRock’s Rieder thinks one corner of the bond market is too cheap
