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Fuss: Nothing Is Outlandishly Cheap

Loomis Sayles' Dan Fuss doesn't see any great bargains in the fixed-income world right now.

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Question: Biggest threat to bond investors now – rising interest rates or credit defaults?

Fuss: Neither is on top of us right now. Eventually, it's rising interest rates and it doesn't necessarily threaten, it depends how you deal with it. Defaults are always a big problem. They are just not here in present right now, specifically in U.S. corporates. For the moment, they're very low. As you go forward into even this current cycle, it's going to be more of a problem in the low grade area because the new financing is done with lousy indentures to protect the issuer. Good for the issuer, bad for the investor. It happens every cycle, and its happening again.

Kathryn Young does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.