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Video Insights

For Fixed Income in 2021, a Good Defense is Still the Best Offense

 

Tom and Nolan break down some of the challenges facing fixed income investors today — including the combination of low interest rates and tight credit spreads that have resulted in record-low yields across the fixed income marketplace. For example, the starting yield to worst (lowest possible yield without defaulting) for the U.S. investment grade corporate index entered 2021 at a record-low level.

With this challenging environment as a backdrop, Tom and Nolan share insights into where they're finding opportunities, today's portfolio positioning, and more.

View the full video transcript here.

 

 

Fixed Income Insights / 01.13.2021

Legends Live On

We have described the market turmoil of 2020 as being like a hurricane, and we are pleased to have navigated it adeptly. As we face a future filled with uncertainties, we believe we're strongly positioned to weather storms ahead, and to do so with invaluable experience to guide our decisions.
Video Insights / 01.20.2021

2021 Outlook

Weitz equity portfolio managers Wally Weitz, Brad Hinton, and Drew Weitz join Asset TV for a review of last year's challenges, what the new presidential administration could mean for the markets, and thoughts on possible light at the end of the tunnel for the COVID-19 pandemic. 

 


 

IMPORTANT DISCLOSURES

The opinions expressed are those of Weitz Investment Management and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through the date of publication, are subject to change at any time based on market and other current conditions, and no forecasts can be guaranteed. This commentary is being provided as a general source of information and is not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy. Investment decisions should always be made based on an investor's specific objectives, financial needs, risk tolerance and time horizon.

Past performance is not a guarantee of future results.

Holdings are subject to change and may not be representative of a Fund's current or future investments.

Chart: Path of long-term Treasury rate over last 40+ years. Source: Bloomberg as of 02/04/21.

Chart: U.S. Investment-Grade Starting Yield to Worst vs. Year-End Total Return. Source: CreditSights, ICE BofA Indices. This data represents the effective start-of-year (Jan. 1) yield to worst of the ICE BofA US Corporate Index which tracks the performance of U.S. dollar denominated investment-grade rated corporate debt publicly issued in the U.S. domestic market.

Yield to Worst refers to the lowest potential yield (most conservative yield) that can be received on a bond without the issuer actually defaulting. YTW is calculated by using worst-case scenario provisions, including prepayments, calls and sinking funds. Furthermore, YTW is a forward-looking estimate that ignores capital gains.

Interest rate risk and duration: The shorter a fund's duration, the less sensitive it will be to shifts in interest rates. As of 12/31/20: Weitz Core Plus Income Fund had an average effective duration of 4.2 years compared to its benchmark of 6.1 years, and Weitz Short Duration Income Fund had an average effective duration of 1.1 year compared to its benchmark at 1.5 years.

Consider these risks before investing: All investments involve risks, including possible loss of principal. Market risk includes political, regulatory, economic, social and health risks (including the risks presented by the spread of infectious diseases). Changing interest rates may have sudden and unpredictable effects in the markets and on the Fund's investments. The Fund may purchase lower-rated and unrated fixed-income securities, which involve an increased possibility that the issuers of these may not be able to make payments of interest and principal. See the Fund's prospectus for a further discussion of risks.

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