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Published on Aug 9, 2016
Central
banks have pushed their stimulus programs as far as they can go,
leaving very few areas for a bond investor to make money other than high
yield, said Carl Kaufman, portfolio manager for the Osterweis Strategic
Income Fund . 'We may still have some room to go if they go helicopter
money, but we are in the tenth inning here,' said Kaufman. 'I think
returns are going to be low for sovereign and investment-grade bond
investors, but there is still some room on the high yield side.' The
Osterweis Strategic Income Fund is up 6.3% thus far in 2016, according
to Morningstar. The $4.9 billion fund has returned an average of 3%
annually over the past three years, placing it in the 65th percentile in
Morningstar's high yield bond category. The fund sports a trailing
twelve month yield of 5.7%, according to Morningstar. Over 80% of
Kaufman's fund is in short duration high yield securities. Kaufman said
the fund has less than 80 names that are chosen on a bottoms up basis
and are purchased with the intent of holding them to maturity. As of the
end of June, some of the fund's larger allocations were in issues from
Rite Aid, Regis Corp and Hertz, according to Morningstar. Kaufman said
he currently has minimal exposure to the energy and materials sectors,
even though they have been big winners this year in the high-yield arena
after last year's collapse. 'They helped us last year, they didn't help
us this year and going forward I don't think they will be much help,'
said Kaufman. 'They will pretty much recoup their losses.' Kaufman is
also keen on cash at this juncture, calling it a 'strategic asset class'
that will allow him to buy on market weakness. And he sees that market
weakness coming around the November election. 'The central banks are
full steam ahead trying to float markets and we're raising cash in this
environment,' said Kaufman.Watch @Sarge986 with more on the U.S. markets in a replay NOW: https://t.co/zAQXrc8Wk1 #MiddayMovers pic.twitter.com/VW7sFybOKO— Yahoo Finance (@YahooFinance) August 9, 2016
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