Fixed Income Investing: Reexamine Everything

For the time being, our fixed income teams believe being cautious is paramount.  For us, that involves reexamining everything. We’re “re-underwriting” every security—reassessing its creditworthiness and reviewing its ability to withstand a recession. If we’re not comfortable with our evaluation, we’re removing the holding from portfolios.

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Being cautious also applies to investment-grade securities. Governments all over the world are issuing more debt to help deal with the crisis, and it’s important to understand that not all sovereign debt is created the same.

Credit markets are also challenged by the decline in liquidity—the ability to sell securities with ease and at a reasonable price. Under these conditions, you want to have confidence in your positions—another reason to reexamine everything.

When you're in the middle of a stressful times, it’s easy to get caught up in the here and now. My team and I believe we will get through this by following our process and offer these three tips: Take a step back. Slow down. Have patience.

Watch my latest video for more insight, including the potential for negative U.S. interest rates.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

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