Displaying items by tag: fixed income

Private credit managers often tout their locked-up capital as a key strength, insulating them from the kind of liquidity runs that plagued banks like Silicon Valley Bank. However, the rise of evergreen vehicles—funds allowing periodic redemptions—has introduced new vulnerabilities, especially as firms like Blackstone and Apollo have raised nearly $300 billion from retail investors. 

While evergreen funds offer some liquidity and mass appeal, especially through wealth advisors, their structure forces managers to continuously invest and meet redemptions, reducing the strategic flexibility that once defined private credit’s advantage. 

This could erode returns, particularly if managers are pressured to lend during inopportune times or sell illiquid assets at discounts to meet withdrawals. Though redemptions are capped and many investments naturally mature over time, a crisis could still lead to redemption surges that slow new lending and strain fund performance. 

Finsum: As evergreens attract less experienced investors and chase more capital, the sector risks undermining its own resilience unless managers remain disciplined and transparent.

Structured notes can offer attractive returns, but they come with notable risks that investors should carefully consider. One of the primary concerns is liquidity risk, as these products often lack a secondary market, making it difficult to sell before maturity without potentially accepting a steep discount. 

Market risk is also a factor, since structured notes are tied to the performance of underlying assets that may be volatile, especially when linked to speculative markets. Even if a note includes downside protection, extreme fluctuations can still lead to losses. 

Default risk is another major issue, as the investor’s return ultimately depends on the solvency of the issuing institution. In the event of a bankruptcy—such as Lehman Brothers’ collapse—investors may lose their entire principal regardless of market performance.

Finsum: However, when structured thoughtfully, these notes can offer enhanced yields, downside buffers, or tailored exposure to specific markets not easily accessed through traditional investments.

In March, U.S. equity markets retreated sharply, driven by renewed tariff tensions and mounting economic uncertainty, marking their steepest monthly losses since 2022. International stocks, however, maintained their relative strength and continued to outperform the S&P 500 on a year-to-date basis. 

This environment reinforces the importance of active management in fixed income model portfolios, where careful duration and credit positioning can help mitigate downside risks while still capturing income opportunities. 

Dividend-focused equities stood out as a resilient segment, benefiting from their tilt toward defensive sectors amid market volatility. Fixed income returns were subdued overall, with longer-duration bonds and lower-quality credit coming under pressure from rising stagflation concerns. Income portfolios remain positioned defensively, emphasizing quality income sources across asset classes to navigate a more uncertain economic landscape.

Finsum: Investors are favoring income-generating assets with stable cash flows as risk sentiment declined.

Vanguard has introduced its first dynamic asset allocation fixed income model portfolios, expanding its suite with the Fixed Income Risk Diversification and Fixed Income Total Return options. These new models are designed to support financial advisors by actively adjusting allocations throughout the year, guided by Vanguard’s 10-year Capital Markets Model forecasts. 

Aimed at outperforming benchmarks like the Bloomberg U.S. Aggregate and Universal Indexes, the portfolios are tailored to varying risk appetites and investment timelines. The Risk Diversification model emphasizes global investment-grade bonds for stability, while the Total Return model adds high-yield exposure for greater accumulation potential.

 With expense ratios of 0.05% and 0.08% respectively, the models reflect Vanguard’s continued focus on low-cost, research-driven solutions. 

Finsum: Their debut also aligns with broader industry momentum toward model portfolios, with advisors increasingly favoring them over traditional fund-of-funds structures.

Halo Investing has secured $12 million in Series B funding to enhance transparency and competition in structured notes investing. Backed by investors like Allianz Life Ventures and William Blair Circle, the platform aims to make structured notes more accessible by eliminating traditional high minimum investment requirements. 

As the world’s first independent, multi-issuer technology platform for structured notes, Halo enables advisors to offer protective investing in an unbiased, data-driven manner. CEO Jason Barsema emphasized the company’s mission to provide equal investment opportunities for all, from everyday investors to corporate executives. 

The platform streamlines order management, enhances compliance, and optimizes back-office efficiency for issuers and wealth managers. 

Finsum: With this latest innovation, structured notes are a rapidly developing investment framework.