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Strategic Fixed Income Investing: An Insider's Perspective on Bond Markets, Analysis, and Portfolio Management

Book Description

Build a fixed income portfolio that will weather volatility and instability

Designing a fixed income portfolio is an essential skill of any investment manager or advisor. This book outlines the critical components to successfully navigate through stable and turbulent markets, using real-life lessons from a seasoned institutional asset manager. The first section includes commentary on the changing fixed income market and overall economy, while the second section outlines the processes to navigate these ever-evolving markets including portfolio construction, the Federal Reserve, credit analysis and trade execution. Ladder Methodology is highlighted and the book discusses its pros and cons, gives examples of both well-constructed and poorly executed laddered bond portfolios and offers alternatives to traditional asset classes.

  • Benefit from lessons learned, providing real life examples of market scenarios and trades

  • Prepare fixed income portfolios that can weather any storm

  • Written by Sean P. Simko, an expert on fixed income investing, who shares his investing experiences from the past 16 years

  • Outlines the key principles of the Ladder strategy

From strategy to execution, Strategic Fixed Income Investing offers the road map to help investment managers prepare portfolios that will insulate investments against adverse market conditions.

Table of Contents

  1. Cover Page
  2. Title Page
  3. Copyright
  4. Dedication
  5. Contents
  6. Preface
  7. Acknowledgments
  8. Part One: The Investing Environment
    1. Chapter 1: Expect the Unexpected
      1. THE MODEL HAS CHANGED
      2. LESSONS LEARNED
      3. FROM BAD TO WORSE
    2. Chapter 2: Navigating through Troubled Water
      1. DEBT CEILING
      2. TRIPLE A: LOST, BUT NOT FORGOTTEN
      3. POSSIBLE, BUT NOT PROBABLE, CONSEQUENCES
      4. WARNING SIGNS
    3. Chapter 3: Lessons Learned
      1. PATTERNS EMERGE
      2. MONEY MARKETS
      3. TREASURY BILLS, THE FAVORED ASSET CLASS
      4. MUNICIPALS FELT THE PAIN AS WELL
      5. AUCTION-RATE MARKETS WERE HIT HARD
    4. Chapter 4: Direction in a Sometimes Directionless Market
      1. FINDING DIRECTION
  9. Part Two: The Fixed Income Investor
    1. Chapter 5: Define the End Investor
      1. RISK
      2. RISK-AVERSE INVESTOR
      3. A PROBLEMATIC TRADE?
      4. RISK-TAKING INVESTOR
      5. DEFINE YOUR STRATEGY
      6. ACTIVE STRATEGY
    2. Chapter 6: Portfolio Construction
      1. FACTOR 1: DEFINING YOUR RISK
      2. FACTOR 2: ALIGNING GOALS
      3. FACTOR 3: PORTFOLIO ANALYSIS
      4. BOTTOM LINE
    3. Chapter 7: Asset Allocation
      1. THE ROAD MAP
      2. GOING GLOBAL
    4. Chapter 8: The Federal Reserve and Central Banks
      1. HAWKS AND DOVES
      2. THE FED FUNDS RATE
      3. A SHORT-TERM FIXED INCOME INVESTOR
      4. HOOKED ON ACCOMMODATION
      5. DEPOSITS WITH CENTRAL BANKS
      6. WHAT ABOUT THE UNITED STATES?
      7. FOMC: LOOK FOR CLUES FROM THE FED STATEMENT
      8. WHAT TO LOOK FOR FROM THE FED … CLUES?
      9. FOMC STATEMENT: AUGUST 2011
      10. QE OR NOT QE
      11. CALMING STATEMENTS FOR INVESTORS
    5. Chapter 9: The Economy and the Markets
      1. THE PAYROLL PICTURE: THE BACKBONE TO THE ECONOMY
      2. BUREAU OF LABOR STATISTICS WEBSITE
      3. INFLATION: A FIXED INCOME INVESTOR'S ENEMY
      4. CONSUMPTION: AMERICA'S FUEL
      5. THE FEDERAL CHAIRMAN: THE WIZARD HIMSELF
    6. Chapter 10: The Yield Curve
      1. THE SPREAD
      2. THE MONEY MARKET ARENA
      3. THE DIRECTION OF RATES
      4. A STEEP YIELD CURVE
      5. A FLAT YIELD CURVE
      6. AN INVERTED YIELD CURVE
      7. LISTEN TO THE CURVE
    7. Chapter 11: The Ladder and Why You Need One
      1. HOW IT WORKS
      2. THE LONG END POSES CHALLENGES
      3. THE SWEET SPOT
      4. LIQUIDITY
      5. CONSISTENT COUPONS
      6. WHY IS SUPPLY IMPORTANT?
      7. PERFORMANCE AND HOW TO MEASURE IT
      8. LOW-TURNOVER DILEMMA
      9. SUCCESS OF A STRATEGY
    8. Chapter 12: Alternatives to a Traditional Ladder Strategy
      1. TIPS: THE OTHER TREASURY
      2. CONSIDER MBS POOLS OF MORTGAGES
      3. CONSIDER CORPORATE BONDS
      4. FLOATING-RATE NOTES
      5. THE BOTTOMING PROCESS
    9. Chapter 13: Credit Analysis
      1. THE AGENCY
      2. CREDIT ANALYSIS: NECESSARY, NOT OPTIONAL
      3. CREDIT FOR A PASSIVE STRATEGY
      4. AFTER THE INITIAL APPROVAL
      5. NOT ALL BONDS ARE EQUAL
      6. STAY AHEAD OF THE HERD
    10. Chapter 14: The Four Pillars of Trade Execution
      1. THE FIRST PILLAR: EXECUTED PRICE
      2. THE SECOND PILLAR: DEALER INQUIRIES
      3. THE THIRD PILLAR: LIQUIDITY
      4. THE FOURTH PILLAR: EASE OF TRANSACTION
    11. Chapter 15: There Are No Roadblocks, Just Detours
      1. KNOW WHAT YOU OWN
      2. BANKING SECTOR
      3. GO WITH YOUR GUT!
      4. DON'T TAKE IT PERSONALLY
      5. TRAPPED IN PURGATORY
  10. Index