Award-winning unconstrained bond-fund manager Dan Roberts of MacKay Shields is Consuelo Mack’s guest on this episode of WealthTrack. Mr. Roberts, who manages the MainStay Unconstrained Bond Fund, highlights the “exploding” balance sheets of central banks, including the Federal Reserve, whose balance sheet has more than quintupled in size since the start of the financial crisis. This, of course, has been the result of efforts to flood global economies with newly printed money, and to keep interest rates low. But since falling interest rates drive up bond prices, it has also led to a bull market in bonds, and now bond valuations are stratospheric.
Expensive, low-yielding bonds negate the traditional reason investors hold bonds: for value stability and income. So what’s an investor to do? Mr. Roberts makes the case for “unconstrained” fixed-income investing, which affords the flexibility to shift allocations to meet opportunities.