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The Right Bonds for a Slower-Growth Environment

Michael Herbst

Michael Herbst: And lastly, it seems, even though we are in the midst of a partial recovery in the fixed-income markets, you have commented a number of times that the rest of the recovery as it comes won't necessarily be smooth. Could you give some guidance in terms of what investors might be able to reasonably expect if they are thinking about making a fixed-income investment at this point and hoping to hold that fixed-income investment even for say the next three to five years?

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A lot of that may be inflation and only a little bit may be real, but from a bond investor's standpoint, the message really stays similar. Whether it is re-flation or inflation, Treasuries are probably too low in yield and too risky to hold, in our opinion, for the long term.

Corporate securities, high-yield, and some of the situations in residential mortgage backed securities and commercial mortgage backed securities will prosper whether we have re-flation or inflation.

Herbst: Thank you so much for sharing your insights.

Rivelle: Thank you.