Joel Binder, chief investment strategist at Old Second Wealth Management, said the firm has not been buying a lot of corporates recently, but may look to them in the future. The firm has been looking more at municipal bonds and mortgage-backeds.
The firm has stayed away from corporates because spreads have been historically tight, Binder said. Also, he said that the market has increasingly seen issuers end up with private equity buyouts and the terms of indentures have generally been insufficient in terms of protecting the bond holder. "We just haven't [found] them all that compelling," he said.
However, Binder does anticipate the firm could look back to that space in the future. "I would suspect we will probably move back into the corporate bond market if we see...the economy slowing and the shorter end of the treasury curve comes down," he said. He cautioned, however, that in a slower economy, one has to be aware about yield spreads.
The firm has currently been buying premium bonds on the tax-exempt side; he said munis are attractive right now. He also said having a diversified portfolio of mortgage-backed assets could be good.
The Aurora, Ill.-based firm has just under $1 billion in assets under management, with about 64% in fixed income, but that ranges from institutional accounts to retirement benefits accounts, etc. He said the firm does not have one benchmark, it varies by account, but it does use the Lehman Brothers Aggregate Bond index.