Jason Greenblath talks fixed income on Just For Funds with Nasdaq ETFs
Jason Greenblath discusses the fixed-income market with Gabrielle Vennitti of Nasdaq in this Just for Funds with Nasdaq ETFs video.
Jason Greenblath, Senior Portfolio Manager & Head of Corporate Credit at American Century Investments®, met with Gabrielle Vennitti, Head of ETF Listings at Nasdaq, to discuss developments in the fixed-income space today and to touch on our ETF, SDSI. The American Century® Short Duration Strategic Income ETF (SDSI) is an actively managed ETF that primarily seeks high current income with a secondary goal of long-term capital appreciation. The fund invests across a mix of investment-grade and high-yield bonds, keeping an average portfolio duration of three years or less to help mitigate interest rate risk.
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Exchange Traded Funds (ETFs) are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns.
SDSI: American Century Short Duration Strategic Income ETF
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
This information is for educational purposes only and is not intended as a personalized recommendation or fiduciary advice. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
Fixed-income investments are subject to interest rate risk. Generally, as interest rates rise, the value of the securities held in the fund will decline. The opposite is true when interest rates decline. In addition, the lower-rated debt securities in which the fund invests are subject to greater credit risk and liquidity risk. Credit risk is the risk that an obligation won't be paid and a loss will result. Liquidity risk is the risk that the fund will have difficulty selling its debt securities.
Derivatives may be more sensitive to changes in market conditions and may amplify risks.
This fund is an actively managed ETF that does not seek to replicate the performance of a specified index. To determine whether to buy or sell a security, the portfolio managers consider, among other things, various fund requirements and standards, along with economic conditions, alternative investments, interest rates and various credit metrics. If the portfolio manager considerations are inaccurate or misapplied, the fund's performance may suffer.
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
A form of securitized debt, typically backed by pools of corporate loans and their payments.
Credit risk is the risk that the inability or perceived inability of the issuers of debt securities to make interest and principal payments will cause the value of those securities to decrease. Changes in the credit ratings of debt securities could have a similar effect.
The Fed is the U.S. central bank, responsible for monetary policies affecting the U.S. financial system and the economy.
High-yield corporate bonds are higher-risk, high-yielding taxable bonds comprised of debt instruments from corporations rated below BBB by Standard & Poor's.
Combine the characteristics of fixed-rate and adjustable-rate mortgages, with rates remaining fixed for a set period of time and then adjusting periodically according to a specific index.
MBS are groups of home mortgages that are sold by the issuing banks and then packaged together into "pools" and sold as a single security. Non-agency MBS are issued by private entities, such as financial institutions.
Debt resulting from the process of aggregating debt instruments into a pool of similar debts, then issuing new securities backed by the pool (securitizing the debt). Asset-backed and mortgage-backed securities (ABS and MBS, defined further above) and collateralized mortgage obligations (CMOs, defined above) are common forms of securitized debt. The credit quality (defined above) of securitized debt can vary significantly, depending on the underwriting standards of the original debt issuers, the credit quality of the issuers, economic or financial conditions that might affect payments, the existence of credit backing or guarantees, etc.
Refers to selling short, the sale of a security or futures contract not owned by the seller (the seller borrows it for delivery at the time of the short sale). If the seller can buy the security or contract later (to return what was borrowed) at a lower price, a profit results. If the price rises, the borrower/seller suffers a loss. It's a technique used to 1) take advantage of anticipated price declines, or 2) to protect a profit in a long position (see Long position).
In fixed income parlance, spreads are simply measured differences or gaps that exist between two interest rates or yields that are being compared with each other. Spreads typically exist and are measured between fixed income securities of the same credit quality (defined above), but different maturities, or of the same maturity, but different credit quality. Changes in spreads typically reflect changes in relative value, with "spread widening" usually indicating relative price depreciation of the securities whose yields are increasing most, and "spread tightening" indicating relative price appreciation of the securities whose yields are declining most (or remaining relatively fixed while other yields are rising to meet them). Value-oriented investors typically seek to buy when spreads are relatively wide and sell after spreads tighten.
A line graph showing the yields of fixed income securities from a single sector (such as Treasuries or municipals), but from a range of different maturities (typically three months to 30 years), at a single point in time (often at month-, quarter- or year-end). Maturities are plotted on the x-axis of the graph, and yields are plotted on the y-axis. The resulting line is a key bond market benchmark and a leading economic indicator.
Exchange Traded Funds (ETFs): Foreside Fund Services, LLC - Distributor, not affiliated with American Century Investment Services, Inc.