How an Interest Rate Hike Could Impact Closed-Ended Funds
As the interest rate is expected to rise, companies with highly leveraged portfolio investments will see lower returns due to higher interest costs.
How the Closed-Ended Industry Is Innovating for Originations
Closed-ended funds (PSP) have seen a decline in their originations over the past couple of quarters. This came as economic activity was cut in half, stock markets declined globally, and commodity prices fell.
BlackRock, Ares, and Prospect: What to Expect from Their Earnings
BlackRock Capital Investment (BKCC) is expected to post $0.95 earnings per share in the current year and a growth of 6% to $1.01 per share in the next year.
New Partnerships, Exits: Ways for Closed-Ended Funds to Expand
Ares Capital (ARCC) has built a successful partnership with GE Capital’s US-sponsored finance business over the last five-and-a-half years. It has also built other strong relationships through the partnership.
Closed-Ended Funds Carry High Dividend Yields
Closed-ended funds (PSP) tend to pay higher dividends, with a dividend payout ratio of 70%–90%. These companies have a dividend yield in the range of 7%–13%.
Closed-Ended Funds Are Deploying Leverage on Low Interest Rates
BlackRock Capital Investment (BKCC) commands a premium in valuations mainly due to lower leverage. The market sees this as safe since interest rates are expected to rise.
Where are Closed-Ended Funds Investing for Higher Growth?
With declining yields, asset managers are investing for higher growth with lower grade investments and retail investments. Ares Capital has substantially reduced its exposure to first lien loans.
Asset Managers Are Selecting Structured Credit to Improve Yields
Prospect Capital deploys multiple strategies for origination, including
structured credit investments, real estate investments, and online lending.
How Closed-Ended Funds Are Improving Yields in a Difficult Market
Closed-ended funds are boosting their yields by deploying capital in marginally risky asset classes or companies. Prospect Capital (PSEC) has invested in higher-interest-yielding asset classes.
Comparative Analysis: Closed-Ended Asset Managers’ Performance
Closed-ended funds’ operating performance is largely dependent on their cost of capital and selection of right asset classes or companies yielding higher interest income.
China’s official Non-Manufacturing PMI Expanded in November
China’s official non-Manufacturing PMI expanded in November, although at a moderate pace. The reading for November came in at 53.6, up from 53.1 in October.
Why a Rate Hike Would Positively Impact Life Insurers
Life Insurance firms (KIE) are eagerly waiting for the Fed to start raising interest rates, as they are a direct beneficiary of a rate increase.
Why Asset Sensitivity Is Rising for US Banks
The asset sensitivity of large-cap and mid-cap US banks (XLF) has been rising over the last few months as discussed in a report by Credit Suisse (CS).
Why Banks Are Anxious about the Fed Meeting
Interest rates are the most important driver for a bank, as they determine banks’ net interest margins.
Investing in the Financials Sector: How to Play the Rate Hike
It is now a well-established fact that financials benefit from a rate hike. Investors have eyed the financial services space since the beginning of 2015 on expectations of a rate hike.
European Banks Have Recovered at Slower Pace Compared to US Banks
A large extent of the troubles that European bank stocks are facing are attributable to weak profitability.
US Markets Have Outperformed European Markets since Recession
During the period between September 2008 and March 2009, US stock markets, represented by the S&P 500 SPDR ETF (SPY), plunged nearly 50%.
Leveraged Loan Funds See More Outflows
Leveraged loan funds saw an outflow for the week ending November 25. The quantum of outflows was $742.0 million last week—up from $306.2 million in the previous week.
Leveraged Loans’ Primary Market Issuance Fell Sharply
The US leveraged loans market saw an allocation of $0.53 billion worth of dollar-denominated senior loans in the week to November 27.
Outflows in High-Yield Funds Fell, Yield on High-Yield Bonds Rose
Investor flows in high-yield bond funds were negative last week. According to Lipper, the net outflows from high-yield bond funds totaled $0.5 billion.
