Thank you for the info.....certainly sounds interesing.... somthing I will be reviewing with my guy tomorrow morning.
I have to wonder why none of my guys (JP or MS)have never told me about this stuff?
Many advisors only think of bonds in terms of treasuries, and as a haven against risk, or a deflationary bet. That is a short term perspective. Treasuries are too expensive right now, they offer no real reward. But corporates have an excellent Sharp ratio long term, and frequently have great entry points in down markets.
That annual standard deviation on that fund's ride over that period was 3.4%, for example.
I'll take a smooth return well above cash over a bouncing ping pong ball half the time above it and half below it, even if the second mathematically averages out to a higher average return. One, you can't believe the average because it is all luck of the end points; it looks worse at the times you should be buying and good when you should be steering clear etc. Two, if you want the reward for such risks, just lever up a little.
In the medium term I see sluggish growth but no serious inflation, and that is perfect for senior private securities. I hear a lot of people hyperventilating about inflation because the money supply is bigger than 2 years ago. Um sure, but asset prices are down ten times as much. (Also the Fed's sheet peaked in April, if anyone is paying attention...)
You can hedge higher rate risk if you are worried about that in the futures. I personally think calling for short rates to eventually get up off the zero floor is the easiest single prediction out there; that say "short the Eurodollar". With that on anyway, I am perfectly comfortable being long intermediate corporate bonds. At some point I may add a short of the treasury 10 year too; right now I think that is still early.
In the long run, US corporations will pay as contracted and credit spreads will revert to normal. When, I neither know nor care...