One of the bigger questions facing advisors and investors right now revolves around credit. Inflation, volatility, and Fed rate hikes all loom, potentially heightening credit risk for portfolios. Navigating that risk may be a crucial task in the second half of this year. American Century Investments’ Jason Greenblath recently appeared on the Schwab Network to discuss.
Key Takeaways:
- During his appearance, Greenblath discussed credit risk, Fed rate hikes and opportunities in fixed income.
- American Century Investments offers funds like KORP that provide exposure to corporate bonds.
- With default risk limited, finding yield through astute, firm-by-firm assessment may be the best path forward.
Greenblath is vice president, senior portfolio manager, and director of Corporate Credit Research at American Century Investments. He joined host Nicole Petallides on the “Opening Bell” to analyze how rising Federal Reserve rates might impact the market. This follows his recent discussion with VettaFi, where he shared similar insights on corporate credit and portfolio risk.
“How much higher can rates go before credit starts to be impacted? Probably a lot more than what’s priced in today,” Greenblath said in response to Petallides. “I think we need a lot more rate hikes and a lot more volatility before credit starts to really crack…we think here at American Century that if we see those one or two rate hikes later this year, that the market will respond and continue to buy into these higher yields.”
Rather than the credit market story focusing on default risk, he explained, the situation instead focuses on where to find the best yields. For Greenblath, outside of a small slice of the market — say about five percent — rate shifts impact the yield hunt.
