Highlights from investment-grade, bank-loan, and high-yield asset classes.
Source: Bloomberg, Credit Suisse and Morningstar® as of 8/31/23.
Investment-grade corporate bonds represent the Bloomberg US Credit Index and index components. This index measures the performance of investment grade, US dollar-denominated, fixed-rate, taxable corporate and government-related debt with at least 10 years to maturity. Bank loans represent the Credit Suisse Leveraged Loan Index and index components. This index is designed to mirror the investable universe of the U.S. dollar-denominated leveraged loan market. High yield represents by the Bloomberg US Corporate High Yield Index and index components. This index covers performance for U.S. high-yield corporate bonds. An option-adjusted spread (OAS) is the measurement of the spread of a fixed-income security rate and the risk-free rate of return.
1 Yield quoted is yield-to-worst. Yield-to-worst is a measure of the lowest possible yield from purchasing a bond apart from a company defaulting.
2 Yields represent four-year effective yield. The effective yield is a financial metric that measures the interest rate (or coupon rate) return on a bond.
3 Yields represent three-year effective yield. The effective yield is a financial metric that measures the interest rate (or coupon rate) return on a bond.
Bank loans (also known as floating-rate loans or leveraged loans) invest in bonds and other fixed-income securities that have variable, as opposed to fixed, interest rates.
A basis point is one hundredth of a percent, so 100 basis points is equivalent to 1%.
The Bloomberg US Corporate Index is a broad measure of the U.S. investment-grade fixed-income securities market.
A collateralized loan obligation (CLO) is a single security backed by a pool of loans, collected into a marketable instrument via process known as securitization.
The compound annual growth rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investment’s life span.
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity.
A credit spread, also known as a yield spread, is the difference in yield between two debt securities of the same maturity but different credit quality.
A discount margin is the average expected return of a floating-rate security (typically a bond) that's earned in addition to the index underlying, or reference rate of, the security.
The Global Financial Crisis was the sharp decline in economic activity that started in 2007 and lasted several years, spilling into global economies.
High-yield bonds, or junk bonds, are corporate debt securities that pay higher interest rates than investment-grade bonds.
Investment grade refers to the quality of a company's credit. To be considered an investment grade issue, the company must be rated at “BBB” or higher by Standard and Poor's or Moody’s.
Maturity is the agreed-upon date on which the investment ends, often triggering the repayment of a loan or bond, the payment of a commodity or cash payment, or some other payment or settlement term.
Mortgage-backed securities (MBS) are investment products similar to bonds. Each MBS consists of a bundle of home loans and other real estate debt bought from the banks that issued them.
The option-adjusted spread (OAS) measures the difference in yield between a bond with an embedded option, such as a mortgage-backed security, with the yield on Treasuries.
Private credit is an asset defined by non-bank lending where the debt is not issued or traded on the public markets.
Treasury auctions is a public auction, held weekly by the U.S. Treasury, of federal debt obligations—specifically, Treasury bills (T-bills), whose maturies range from one month to one year.
Yield is the income returned on an investment, such as the interest received from holding a security.
Yield curve control (YCC) involves targeting a longer-term interest rate by a central bank, then buying or selling as many bonds as necessary to hit that rate target.
1 Barclays Investment-Grade Corporate Index
2 JPM Daily Credit Strategy & CDS/COX AM Update, Sept. 8, 2023.
3 Credit Market Strategist BofA Global Research, “Situation Room,” September 2023.
4 Citi Strategy Team, Sept. 8, 2023.
5 JPM Daily Credit Strategy & CDS/COX AM Update, Aug. 17, 2023.
6 JPM Daily Credit Strategy & CDS/COX AM Update, Sept. 5, 2023.
7 Credit Market Strategist BofA Global Research, “Situation Room,” September 2023.
Any performance data quoted represent past performance, which does not guarantee future results. Index performance is not indicative of any fund performance. Indexes are unmanaged, and it is not possible to invest directly in an index. For current standardized performance of the funds, please visit www.artistotlefunds.com.The views expressed are as of the publication date and are presented for informational purposes only. These views should not be considered as investment advice, an endorsement of any security, mutual fund, sector or index, or to predict performance of any investment or market. Any forward-looking statements are not guaranteed. All material is compiled from sources believed to be reliable, but accuracy cannot be guaranteed. The opinions expressed herein are subject to change without notice as market and other conditions warrant.
Investors should consider a fund's investment goal, risks, charges, and expenses carefully before investing. The prospectuses contain this and other information about the funds. The prospectuses and/or summary prospectuses should be read carefully before investing.
Investing involves risk. Principal loss is possible.
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