In this series of brief Q&A videos, watch Matt Freund, CFA, Co-CIO, Head of Fixed Income Strategies and Senior Co-Portfolio Manager, and Christian Brobst, Vice President, Co-Portfolio Manager, explain how our team is capitalizing on today’s opportunity with short duration bonds. For those of you new to Calamos’ fixed income capabilities, Matt and Christian also expand on the team’s overall approach.
Yes, in a very rare occurrence referred to as an inversion, investors are “being paid more to take less duration risk,” explains Freund. That makes the short duration space currently a target-rich environment, Brobst adds—providing investors the opportunity to take interest rate risk off the table without giving up yield compensation (also see this post).
CSTIX takes a measured approach to below-investment grade risk, with a cap of 20%. The difference-maker, according to Brobst: the fund relies on a unified credit research team responsible for covering names in the investment grade and high yield universe—enabling it “to capture trades that might be missed at firms where the two functions are divided.”
A three-day, three-month, three-year or 30-year security can all carry the same rating, even though the risks are obviously very different, notes Freund. This can lead to a misunderstanding of bond ratings that creates market inefficiencies.
Freund comments on the disciplined and repeatable process emphasizing credit research. “The most important thing is that we understand the risks that we're taking on our clients’ behalf and that we're being well paid,” he says.
The Calamos Fixed Income team takes the middle ground, according to Freund, and is neither macro-driven like some funds or index-like comparable to other funds.
“We're really very opportunistic within the style box, so we're cognizant of the risks and characteristics that our investors are expecting. But at the same time, we're focused on risks and being well paid,” he says.
The team’s application of ESG factors to its bond-by-bond approach has earned high marks for its sustainability, explains Brobst.
Investment professionals, for more information about Calamos Short-Term Bond Fund (CSTIX) or our approach to fixed income investing, contact your Calamos Investment Consultant at 888-571-2567 or email firstname.lastname@example.org.
Before investing carefully consider the fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-800-582-6959. Read it carefully before investing.
Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations.
Opinions are subject to change due to changes in the market, economic conditions or changes in the legal and/or regulatory environment and may not necessarily come to pass. This information is provided for informational purposes only and should not be considered tax, legal, or investment advice. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations.
The principal risks of investing in the Calamos Short-Term Bond Fund include: interest rate risk consisting of loss of value for income securities as interest rates rise, credit risk consisting of the risk of the borrower to miss payments, high yield risk, liquidity risk, mortgage-related and other asset-back securities risk, including extension risk and prepayment risk, US Government security risk, foreign securities risk, non-US Government obligation risk and portfolio selection risk. As a result of political or economic instability in foreign countries, there can be special risks associated with investing in foreign securities, including fluctuations in currency exchange rates, increased price volatility and difficulty obtaining information. In addition, emerging markets may present additional risk due to potential for greater economic and political instability in less developed countries.