1 00:00:17,720 --> 00:00:20,440 Speaker 1: Hello, and welcome to the Credit Edge, a weekly markets podcast. 2 00:00:20,640 --> 00:00:23,759 Speaker 1: My name is James Crombie. I'm a senior editor at Bloomberg. 3 00:00:23,440 --> 00:00:27,160 Speaker 2: And I'm Jeannief Cooper, senior analyst at Bloomberg Intelligence. This week, 4 00:00:27,200 --> 00:00:30,760 Speaker 2: we are very pleased to welcome Savina Risova, co Chief 5 00:00:30,760 --> 00:00:35,040 Speaker 2: Investment Officer and Global head of Research at Dimensional Fund Advisors, 6 00:00:35,280 --> 00:00:38,920 Speaker 2: at seven hundred and ninety billion investment firm. How are you, Savina, good? 7 00:00:39,000 --> 00:00:40,040 Speaker 3: Thank you for inviting me. 8 00:00:40,320 --> 00:00:43,839 Speaker 2: Savina joined Dimensional Fund Advisors as a research associate in 9 00:00:43,840 --> 00:00:46,240 Speaker 2: two thousand and four, and just of our year ago 10 00:00:46,600 --> 00:00:49,680 Speaker 2: she added the title of co Chief Investment Officer. You 11 00:00:49,760 --> 00:00:53,240 Speaker 2: also obtained a PhD in finance from the University of Chicago. Last, 12 00:00:53,240 --> 00:00:56,440 Speaker 2: but not least, Sabina was recognized as one of Barn's 13 00:00:56,520 --> 00:00:59,560 Speaker 2: one hundred most Influential Women in US Finance for two 14 00:00:59,640 --> 00:01:00,280 Speaker 2: years in. 15 00:01:00,680 --> 00:01:01,880 Speaker 1: So we're going to get into all that, but just 16 00:01:01,920 --> 00:01:04,360 Speaker 1: to set the scene before we do. Markets have rallied 17 00:01:04,360 --> 00:01:06,760 Speaker 1: on high hopes of a broad ceasefire in the trade war, 18 00:01:07,040 --> 00:01:09,360 Speaker 1: but there's still a lot of uncertainty out there, plus 19 00:01:09,360 --> 00:01:12,280 Speaker 1: more volatility to come as the US moves on from 20 00:01:12,360 --> 00:01:16,679 Speaker 1: tariffs to tax and immigration. Reform, headline risk is very high, 21 00:01:16,760 --> 00:01:19,920 Speaker 1: yet credit markets project an air of complacency, with debt 22 00:01:19,959 --> 00:01:22,480 Speaker 1: spreads back below where they were before the so called 23 00:01:22,520 --> 00:01:26,360 Speaker 1: Liberation Day at the start of April. Keeping corporate debt 24 00:01:26,440 --> 00:01:28,640 Speaker 1: risk premium very tight is the fact that there's way 25 00:01:28,680 --> 00:01:31,319 Speaker 1: too much demand for a very limited net new supply 26 00:01:31,440 --> 00:01:34,160 Speaker 1: of corporate bonds, and unless the M and A machine 27 00:01:34,200 --> 00:01:38,000 Speaker 1: cranks back up, that supplied demand imbalance will probably continue. 28 00:01:38,280 --> 00:01:40,199 Speaker 1: On top of that, the US has lost its Triple 29 00:01:40,240 --> 00:01:42,880 Speaker 1: A credit rating, calling into question the idea of risk 30 00:01:42,959 --> 00:01:45,440 Speaker 1: free rate and investors are now looking more at Europe 31 00:01:45,440 --> 00:01:48,200 Speaker 1: and Asia as alternatives, but there are clear limitations when 32 00:01:48,240 --> 00:01:51,640 Speaker 1: it comes to scale and liquidity there. So, Sabina, what's 33 00:01:51,680 --> 00:01:54,080 Speaker 1: your take. I'm going to ask a really broad question 34 00:01:54,120 --> 00:01:55,720 Speaker 1: because it's one that keeps coming up on this show. 35 00:01:55,720 --> 00:01:58,600 Speaker 1: But is credit fairly valued at these levels? 36 00:01:59,000 --> 00:02:02,480 Speaker 3: Well, the meension we don't pretend to have a crystal bow, 37 00:02:02,600 --> 00:02:07,000 Speaker 3: James and know where prices are relative to fair value. 38 00:02:07,520 --> 00:02:11,400 Speaker 3: We actually take priceses kind of given in public competitive 39 00:02:11,480 --> 00:02:15,520 Speaker 3: capital markets. But what we can say is where the 40 00:02:15,560 --> 00:02:19,120 Speaker 3: current credit spreads are relative to historical averages and medians, 41 00:02:19,480 --> 00:02:22,880 Speaker 3: and these days, what you mentioned is absolutely correct. Credit 42 00:02:22,880 --> 00:02:26,680 Speaker 3: spreads have are about eighty to ninety beps depending on 43 00:02:26,720 --> 00:02:30,679 Speaker 3: whether you look at US or global markets below historical 44 00:02:30,760 --> 00:02:33,920 Speaker 3: mediums of over one hundred, one hundred and ten basis points, 45 00:02:34,160 --> 00:02:39,480 Speaker 3: So definitely narrower credit spreads and based on academic research 46 00:02:39,560 --> 00:02:44,480 Speaker 3: underpinning our approach that suggests lower credit premiums expected in 47 00:02:44,520 --> 00:02:49,600 Speaker 3: the future. As a result, our core strategies tend to 48 00:02:49,639 --> 00:02:53,920 Speaker 3: not go to their maximum allowed credit allocation right now, 49 00:02:54,040 --> 00:02:58,920 Speaker 3: and our credit strategies are not allocated to the maximum 50 00:02:59,040 --> 00:03:01,960 Speaker 3: in what we call low work here single aay tripob 51 00:03:02,120 --> 00:03:03,399 Speaker 3: bombs for example. 52 00:03:03,800 --> 00:03:06,080 Speaker 2: So in terms of allocation, I mean, are you looking 53 00:03:06,560 --> 00:03:09,679 Speaker 2: across the credit spectrum, do you have any views on 54 00:03:10,320 --> 00:03:14,080 Speaker 2: higher quality names versus lower quality names given the environment. 55 00:03:14,560 --> 00:03:17,480 Speaker 3: Absolutely, And it's probably worth kind of taking a step 56 00:03:17,480 --> 00:03:20,080 Speaker 3: back and just telling people a little bit more about 57 00:03:20,120 --> 00:03:22,680 Speaker 3: who they mention is and how we approach investing both 58 00:03:22,720 --> 00:03:25,880 Speaker 3: in equities and fixed income, because I think it's pretty 59 00:03:25,960 --> 00:03:28,480 Speaker 3: unique and different from a lot of guests you've had 60 00:03:29,000 --> 00:03:32,680 Speaker 3: on the podcast. The Dimensional is a firm that was 61 00:03:32,720 --> 00:03:37,400 Speaker 3: founded in nineteen eighty one to implement kind of rigorous 62 00:03:37,480 --> 00:03:42,760 Speaker 3: research into robust investment solutions. One we would like to 63 00:03:42,760 --> 00:03:46,800 Speaker 3: think about. It is sensible ideas, implement it thoughtfully and 64 00:03:46,960 --> 00:03:50,360 Speaker 3: so and it comes to fixed income. You mentioned Gene 65 00:03:50,400 --> 00:03:55,119 Speaker 3: Fama being one of the academics tightly connected to dimensional 66 00:03:55,600 --> 00:03:57,560 Speaker 3: He did a lot of research in the seventies and 67 00:03:57,560 --> 00:04:01,600 Speaker 3: eighties in terms of what drives expect bond returns. And 68 00:04:01,640 --> 00:04:05,360 Speaker 3: if you think of the expected returnal defaulte free bond, 69 00:04:05,560 --> 00:04:08,920 Speaker 3: like what my thing, the US bond still US government 70 00:04:08,920 --> 00:04:12,560 Speaker 3: bands still consider it uh to your earlier point, UH, 71 00:04:12,920 --> 00:04:16,000 Speaker 3: you can actually write it down as like three terms 72 00:04:16,360 --> 00:04:21,560 Speaker 3: yield expected capital appreciation or depreciation depending on the shape 73 00:04:21,560 --> 00:04:24,159 Speaker 3: of the curve, so roll down as some call it. 74 00:04:24,480 --> 00:04:27,880 Speaker 3: And the third term is expected changes in the shape 75 00:04:27,880 --> 00:04:31,480 Speaker 3: of the youth curve. And between now and when you 76 00:04:31,800 --> 00:04:35,360 Speaker 3: expect to sell the bond. So the first two components 77 00:04:35,360 --> 00:04:39,680 Speaker 3: of that decomposition, yield and roll down together our called 78 00:04:39,800 --> 00:04:44,680 Speaker 3: forward rates. And there is a lot of empirical academic 79 00:04:44,720 --> 00:04:49,839 Speaker 3: reaserch showing that forward rates do contain information about subsequent 80 00:04:50,040 --> 00:04:54,200 Speaker 3: bond returns. So differences in forward rates across bonds contain 81 00:04:54,279 --> 00:04:58,880 Speaker 3: information about differences in future bond returns. And you can 82 00:04:58,920 --> 00:05:02,839 Speaker 3: apply the frame and tested and we have not only 83 00:05:02,920 --> 00:05:07,279 Speaker 3: across duration spectrum, but also across credit quality spectrum and 84 00:05:07,400 --> 00:05:12,760 Speaker 3: across currency of issue spectrum. So, for example, the differences 85 00:05:12,839 --> 00:05:17,320 Speaker 3: in fields or forward rates between longer and shorter bonds 86 00:05:17,800 --> 00:05:21,800 Speaker 3: tell you the term spread essentially contain information about the 87 00:05:21,839 --> 00:05:24,919 Speaker 3: future term premium. The wider the term spread is generally 88 00:05:24,960 --> 00:05:28,839 Speaker 3: the wider the subsequent future term premium is. Similarly for 89 00:05:28,960 --> 00:05:31,320 Speaker 3: credit premium and credit spread. That's why I said like 90 00:05:31,680 --> 00:05:35,200 Speaker 3: currently credit spreads are relatively narrower, which means we expect 91 00:05:35,400 --> 00:05:40,360 Speaker 3: relatively narrower credit premiums less reward for holding credit. And 92 00:05:40,400 --> 00:05:45,279 Speaker 3: then similarly you can apply it across different currencies around 93 00:05:45,320 --> 00:05:48,600 Speaker 3: the world. For example, HATCH to USD looking at what's 94 00:05:48,640 --> 00:05:54,880 Speaker 3: steep versus flatter, the steeper curves HASH to USD imply 95 00:05:55,120 --> 00:05:59,159 Speaker 3: higher expected reward for going into those bonds and hedging 96 00:05:59,279 --> 00:06:04,600 Speaker 3: back to USD right now. For example, the Japanese government 97 00:06:05,040 --> 00:06:09,160 Speaker 3: bond curve is relatively steeper haah to USD compared to 98 00:06:09,560 --> 00:06:13,840 Speaker 3: many other develop market currencies, so some of our strategies 99 00:06:13,880 --> 00:06:17,359 Speaker 3: that are allowed to go global are allocating more to 100 00:06:17,480 --> 00:06:23,280 Speaker 3: Japanese intermediate bonds. So in essence that the dimensional we 101 00:06:23,440 --> 00:06:26,320 Speaker 3: look at forward rates the combination of field and roll 102 00:06:26,400 --> 00:06:31,320 Speaker 3: down as the indication of where highest expected returns are 103 00:06:31,400 --> 00:06:35,200 Speaker 3: and allocate on a daily basis based on differences in 104 00:06:35,240 --> 00:06:39,120 Speaker 3: expected returns and those expected returns those forward rates can 105 00:06:39,200 --> 00:06:42,400 Speaker 3: change any day across the credit, the duration and the 106 00:06:42,440 --> 00:06:45,240 Speaker 3: currency of vision spectrum. So it is important to have 107 00:06:45,279 --> 00:06:50,200 Speaker 3: a daily process where we consume information, compute those expect returns, 108 00:06:50,480 --> 00:06:53,120 Speaker 3: and decide how to allocate new cash community or from 109 00:06:53,160 --> 00:06:56,359 Speaker 3: coupons or from cash flows, and what to buy what 110 00:06:56,480 --> 00:06:59,120 Speaker 3: to sell based on those expected return differences. 111 00:07:00,040 --> 00:07:03,080 Speaker 1: Say, Savi, you have a sort of scientific approach to this, 112 00:07:03,880 --> 00:07:06,600 Speaker 1: and you know, you talk about decades of rigorous theoretical 113 00:07:06,760 --> 00:07:10,080 Speaker 1: empirical research. But as we've discussed, you know, the so 114 00:07:10,160 --> 00:07:14,480 Speaker 1: called developed markets are becoming highly unpredictable as politics becomes 115 00:07:14,520 --> 00:07:16,880 Speaker 1: such a big factor. You know, I would say that 116 00:07:16,920 --> 00:07:19,240 Speaker 1: they're behaving a lot more like emerging markets than they 117 00:07:19,320 --> 00:07:21,800 Speaker 1: used to. Who knows what social media posts will wake 118 00:07:21,880 --> 00:07:24,800 Speaker 1: up to on any given day that will royal global markets. 119 00:07:25,360 --> 00:07:27,560 Speaker 1: But how does that affect your approach? Do you need 120 00:07:27,640 --> 00:07:29,440 Speaker 1: new models for that? Do you rip up the script 121 00:07:29,440 --> 00:07:32,240 Speaker 1: and have to you know, really just improvise a lot 122 00:07:32,280 --> 00:07:33,080 Speaker 1: more than you used. 123 00:07:32,960 --> 00:07:37,000 Speaker 3: To not really exactly, because we are kind of grounded 124 00:07:37,080 --> 00:07:43,160 Speaker 3: in evercreen principles of what drives expect the returns. All 125 00:07:43,200 --> 00:07:47,400 Speaker 3: we need is latest market prices essentially to identify bonds 126 00:07:47,440 --> 00:07:50,440 Speaker 3: with higher versus lower expect the returns. And that's why 127 00:07:50,480 --> 00:07:53,720 Speaker 3: we are big advocates for price transparency and we're very 128 00:07:53,720 --> 00:07:57,200 Speaker 3: happy to see trace that trade reporting and compliance engine 129 00:07:57,240 --> 00:07:59,960 Speaker 3: arrived in the early two thousands bringing a lot of 130 00:08:00,160 --> 00:08:04,320 Speaker 3: transparency to the corporate bond market in USD and now 131 00:08:04,480 --> 00:08:08,080 Speaker 3: there's tracks for a non USD. So we have that 132 00:08:08,240 --> 00:08:10,560 Speaker 3: and we use it on a daily basis in real 133 00:08:10,640 --> 00:08:14,760 Speaker 3: time during the day to essential monitor prices as well 134 00:08:14,800 --> 00:08:20,800 Speaker 3: as bidden as quotes across many different bonds to identify 135 00:08:21,320 --> 00:08:24,120 Speaker 3: differences in expected returns. But what we also do with 136 00:08:24,440 --> 00:08:28,120 Speaker 3: current market information as it changes all the time to 137 00:08:28,200 --> 00:08:31,560 Speaker 3: your point right now very volatile markets, is also used 138 00:08:31,600 --> 00:08:35,479 Speaker 3: current market information for the other two very important dimensions 139 00:08:35,480 --> 00:08:38,800 Speaker 3: of investing. So one day mention is expected returns. The 140 00:08:38,840 --> 00:08:42,480 Speaker 3: other two day mensions of investing in general are risks 141 00:08:42,640 --> 00:08:46,240 Speaker 3: and costs, and we use current market information all the 142 00:08:46,320 --> 00:08:50,840 Speaker 3: time to manage risks and control costs in our portfolio. 143 00:08:50,880 --> 00:08:54,160 Speaker 3: Is because we believe that you can add value by 144 00:08:54,280 --> 00:08:58,400 Speaker 3: systematically designing strategies to pursue higher expected returns, but you 145 00:08:58,440 --> 00:09:01,680 Speaker 3: can also add value through talk for portfolio management and trading, 146 00:09:02,120 --> 00:09:05,800 Speaker 3: how do you use current market information? In portfolio management, we, 147 00:09:05,920 --> 00:09:09,080 Speaker 3: for example, track to your point within the day through 148 00:09:09,440 --> 00:09:13,920 Speaker 3: and daily. The deer inventory trace gives us kind of 149 00:09:13,960 --> 00:09:16,960 Speaker 3: information on net deer buys and sales throughout the day. 150 00:09:17,720 --> 00:09:22,160 Speaker 3: We also get that information daily from similar information daily 151 00:09:22,200 --> 00:09:25,320 Speaker 3: from Blueberg and inter the day from trade web and 152 00:09:25,400 --> 00:09:28,080 Speaker 3: market access platforms that many of your listeners probably are 153 00:09:28,080 --> 00:09:32,959 Speaker 3: familiar with, and this helps us identify bones where dealers 154 00:09:33,040 --> 00:09:36,720 Speaker 3: might in augria have an inventory, accumulated inventory might be 155 00:09:36,720 --> 00:09:39,520 Speaker 3: willing to sell to us at a favorable price, and 156 00:09:39,600 --> 00:09:44,360 Speaker 3: similarly for sales, so der inventory is very important to 157 00:09:44,480 --> 00:09:49,360 Speaker 3: monitor to get great execution. Also, we use market prices 158 00:09:49,400 --> 00:09:53,439 Speaker 3: to monitor credit quality. To your point, in the last 159 00:09:53,440 --> 00:09:57,600 Speaker 3: five years, most of the credit rating changes internal credit 160 00:09:57,720 --> 00:10:01,480 Speaker 3: rating changes we've performed most have been driven by prices 161 00:10:01,559 --> 00:10:05,439 Speaker 3: information in current market prices, not by credit rating agencies 162 00:10:05,600 --> 00:10:09,760 Speaker 3: changing their ratings. So what we use there is not 163 00:10:09,880 --> 00:10:14,479 Speaker 3: just prices of bonds, trading or quotes, but also CDs 164 00:10:14,480 --> 00:10:18,760 Speaker 3: market prices. Even the equity prices of the issues of 165 00:10:18,840 --> 00:10:23,559 Speaker 3: those bonds, so you can use current real time market 166 00:10:23,640 --> 00:10:26,720 Speaker 3: information along with kind of the academic framework for what 167 00:10:26,840 --> 00:10:31,520 Speaker 3: drives expected returns to continue to deliver robust investment solutions 168 00:10:31,600 --> 00:10:35,960 Speaker 3: even in highly volatile times as we are experiencing this year. 169 00:10:36,760 --> 00:10:39,960 Speaker 2: So in terms of your investment approach, I mean, I 170 00:10:39,960 --> 00:10:44,080 Speaker 2: mean the two main investment approach being top down or 171 00:10:44,120 --> 00:10:47,160 Speaker 2: bottoms up, and especially you know, looking at all these 172 00:10:47,240 --> 00:10:50,320 Speaker 2: data that is available in terms of as you said, 173 00:10:50,320 --> 00:10:55,240 Speaker 2: trade and ventory prices, how do you reconcile the two 174 00:10:55,520 --> 00:10:59,240 Speaker 2: and how your investment process I'm sure incorporates you know, 175 00:10:59,240 --> 00:11:02,560 Speaker 2: both of the top down view from rates to you know, 176 00:11:02,600 --> 00:11:05,880 Speaker 2: sectors and then the bottom up this this bond is 177 00:11:05,920 --> 00:11:10,280 Speaker 2: actually treading wide or cheap against another one, and that's the. 178 00:11:10,240 --> 00:11:13,440 Speaker 3: Time to buy. Yeah, thank you for the question. It's 179 00:11:13,440 --> 00:11:16,240 Speaker 3: a common question we get because people are in fixed 180 00:11:16,320 --> 00:11:19,680 Speaker 3: income are generally used to two types of investing traditional 181 00:11:19,760 --> 00:11:21,880 Speaker 3: passive and by the way, these are the biggest kind 182 00:11:21,880 --> 00:11:26,560 Speaker 3: of ETFs and mutual funds out there. Indexed approach in 183 00:11:26,640 --> 00:11:30,760 Speaker 3: fixed income with some sampling under the hood, or traditional 184 00:11:30,800 --> 00:11:35,559 Speaker 3: active where you're typically either top down for making macroeconomic 185 00:11:35,600 --> 00:11:38,880 Speaker 3: forecasts and then driving your investment or bottom up picking 186 00:11:38,920 --> 00:11:43,559 Speaker 3: individual bonds based on research on specific sectors or currencies, 187 00:11:43,559 --> 00:11:48,480 Speaker 3: et cetera. We are kind of combining the best of 188 00:11:48,559 --> 00:11:52,240 Speaker 3: both worlds, traditional passive and traditional active in the sense 189 00:11:52,240 --> 00:11:55,520 Speaker 3: that we have broad diversification in our strategies and relatively 190 00:11:55,559 --> 00:11:59,720 Speaker 3: low turnover just like traditional passive, but we are taking 191 00:11:59,760 --> 00:12:04,439 Speaker 3: from traditional active the daily flexible implementation in the pursuit 192 00:12:04,480 --> 00:12:07,280 Speaker 3: of higher expected returns. How do we do it, though 193 00:12:07,360 --> 00:12:11,880 Speaker 3: different from traditional active? Are we top down or bottom up? 194 00:12:12,480 --> 00:12:17,480 Speaker 3: I would say we're both. Why because we start every 195 00:12:17,559 --> 00:12:21,199 Speaker 3: day by looking at the overall spreads out there, turn spreads, 196 00:12:21,240 --> 00:12:25,440 Speaker 3: credit spreads, and spreads across different field cares, heads to 197 00:12:25,640 --> 00:12:30,360 Speaker 3: a local currency, and that kind of guys the overall 198 00:12:30,400 --> 00:12:33,960 Speaker 3: positioning of a portfolio in terms of how much we 199 00:12:34,000 --> 00:12:38,560 Speaker 3: want to okay to credit corporates versus governments or different 200 00:12:38,600 --> 00:12:41,400 Speaker 3: types of currencies. Once we get do this kind of 201 00:12:41,440 --> 00:12:46,240 Speaker 3: top down analysis based on current market information, then we 202 00:12:46,480 --> 00:12:48,880 Speaker 3: try to kind of bottom up looking at what we hold, 203 00:12:49,080 --> 00:12:51,680 Speaker 3: what we want to hold, which bonds within kind of 204 00:12:51,679 --> 00:12:54,439 Speaker 3: the para. Now those parameters how much we want to 205 00:12:54,480 --> 00:12:58,199 Speaker 3: okay to corporate today versus governments within corporates, Let's say, 206 00:12:58,200 --> 00:13:00,960 Speaker 3: which are the bonds with highest expected returns, most attractive 207 00:13:00,960 --> 00:13:04,560 Speaker 3: forward rates, And we start kind of identifying bonds that 208 00:13:04,600 --> 00:13:07,079 Speaker 3: we would like to buy today based on that approach, 209 00:13:07,200 --> 00:13:10,640 Speaker 3: very systematic, and then what we do is we go 210 00:13:10,880 --> 00:13:13,719 Speaker 3: filter those bonds to a bunch of criteria including kind 211 00:13:13,720 --> 00:13:16,480 Speaker 3: of how liquid those bonds are in the marketplace today, 212 00:13:16,720 --> 00:13:20,280 Speaker 3: are we likely to get good prices for those bonds? 213 00:13:20,520 --> 00:13:23,319 Speaker 3: And then once we kind of set on a group 214 00:13:23,360 --> 00:13:25,560 Speaker 3: of bonds we'd like to buy, we pass this to 215 00:13:25,600 --> 00:13:28,920 Speaker 3: the trading that so for from portfolio management to trading, 216 00:13:29,480 --> 00:13:33,439 Speaker 3: where traders whould go to the marketplace and very flexibly 217 00:13:33,920 --> 00:13:38,679 Speaker 3: seek to purchase some of those bonds without being particularly 218 00:13:38,760 --> 00:13:41,440 Speaker 3: attached to an individual bond. And I think this is 219 00:13:42,200 --> 00:13:45,400 Speaker 3: also a huge differentiator for the dimensional is that we 220 00:13:45,480 --> 00:13:49,920 Speaker 3: are not chasing individual bonds picks of a portfolio manager, 221 00:13:50,080 --> 00:13:52,920 Speaker 3: not at all, and that gives us the ability to 222 00:13:53,000 --> 00:13:55,880 Speaker 3: have great execution. What do I mean by great execution? 223 00:13:56,360 --> 00:14:00,720 Speaker 3: When we compare our corporate and agency trades versus the 224 00:14:00,800 --> 00:14:03,760 Speaker 3: prior trade in the same issue or the next trait, 225 00:14:04,200 --> 00:14:07,240 Speaker 3: on average, our trades are twenty basis points better on 226 00:14:07,280 --> 00:14:10,120 Speaker 3: the buy side and five to ten basis points better 227 00:14:10,160 --> 00:14:13,679 Speaker 3: on the sales side because we trede flexibly with patients 228 00:14:14,000 --> 00:14:17,520 Speaker 3: with optionality out there, we have multiple bonds with similar 229 00:14:17,559 --> 00:14:20,840 Speaker 3: expactor returns that we're interested in buying or selling today. 230 00:14:21,440 --> 00:14:24,800 Speaker 1: Your approach seems take a lot of trust in what 231 00:14:24,840 --> 00:14:27,720 Speaker 1: the market price is selling us in terms of transparency 232 00:14:27,720 --> 00:14:30,080 Speaker 1: in terms of the liquidity. But as you know, you know, 233 00:14:30,280 --> 00:14:32,200 Speaker 1: the further you get down the rating spectrum and the 234 00:14:32,200 --> 00:14:34,160 Speaker 1: more you get into sort of exotic credit you know 235 00:14:34,160 --> 00:14:37,360 Speaker 1: e merging markets, those markets get stuff wrong all the time. 236 00:14:37,440 --> 00:14:40,600 Speaker 1: You know, the signals are just plain wrong. How do 237 00:14:40,640 --> 00:14:42,520 Speaker 1: you protect yourself against that as an investor? 238 00:14:42,880 --> 00:14:48,040 Speaker 3: Great question, James, Another great question. We have historically stuck 239 00:14:48,480 --> 00:14:51,840 Speaker 3: to the parts of the market that benefit from a 240 00:14:51,840 --> 00:14:55,320 Speaker 3: lot of price transparency. So, in terms of kind of history, 241 00:14:55,360 --> 00:15:00,720 Speaker 3: Dimensional started in high quality corporate and government back in 242 00:15:00,800 --> 00:15:04,960 Speaker 3: nineteen eighty three with its first fixed income strategy, and 243 00:15:05,000 --> 00:15:08,960 Speaker 3: then later on expanded to develop market currencies, so applying 244 00:15:09,160 --> 00:15:12,720 Speaker 3: our kind of variable maturity and variable currency approaches there. 245 00:15:13,080 --> 00:15:17,840 Speaker 3: And then we started investing in full investment rate only 246 00:15:17,880 --> 00:15:21,120 Speaker 3: in two thousand and nine, actually a few years after 247 00:15:21,280 --> 00:15:25,000 Speaker 3: trades arrived and brought transparency to the corporate bond market, 248 00:15:26,200 --> 00:15:28,440 Speaker 3: and then we started also kind of dipping our tools 249 00:15:28,440 --> 00:15:31,960 Speaker 3: in double bees, but not going below that. To your point, 250 00:15:32,640 --> 00:15:35,360 Speaker 3: once you go the low double bees into single bees 251 00:15:35,440 --> 00:15:40,080 Speaker 3: and three POC's and below, one major concern is the 252 00:15:40,120 --> 00:15:44,640 Speaker 3: default rates. The default rates increase meaningfully on average historically 253 00:15:44,680 --> 00:15:47,880 Speaker 3: for single bees they are like three percent for trip 254 00:15:47,960 --> 00:15:51,400 Speaker 3: o C and below twenty five plus percent. Those are 255 00:15:51,600 --> 00:15:55,640 Speaker 3: we viewed those as not necessarily suitable investments for ETFs 256 00:15:55,640 --> 00:15:58,160 Speaker 3: and mutual funds, which need to provide liquidity on a 257 00:15:58,240 --> 00:16:03,920 Speaker 3: daily basis. Similarly, we've stuck through history to develop market currencies. 258 00:16:04,080 --> 00:16:07,240 Speaker 3: We do not invest directly in emerging market currencies to 259 00:16:07,280 --> 00:16:10,560 Speaker 3: a large degree because of price tre experiency, but also 260 00:16:11,800 --> 00:16:15,720 Speaker 3: because of operational law and order consideration as well. 261 00:16:16,120 --> 00:16:18,760 Speaker 2: I think there is an interesting point of you know, 262 00:16:18,840 --> 00:16:22,800 Speaker 2: create risk transparency and maybe to switch gears a little 263 00:16:22,800 --> 00:16:26,400 Speaker 2: bit and move into private credit. I mean, we've seen 264 00:16:26,440 --> 00:16:29,720 Speaker 2: a huge expansion of private credit, but also a lot 265 00:16:29,720 --> 00:16:32,800 Speaker 2: of comments and risks maybe out there, and some people 266 00:16:32,840 --> 00:16:36,920 Speaker 2: have been saying there is maybe a risk of you know, 267 00:16:37,000 --> 00:16:40,280 Speaker 2: ratings inflation, or risk of lack of transparency or very 268 00:16:40,280 --> 00:16:43,480 Speaker 2: credit trade. I mean, how do you approach private credit 269 00:16:43,560 --> 00:16:45,560 Speaker 2: as a nassage class within fix income. 270 00:16:46,160 --> 00:16:48,200 Speaker 3: So as a manager, they mentioned it is in the 271 00:16:48,240 --> 00:16:52,200 Speaker 3: public space public stocks and public bonds and a systematic approach. 272 00:16:52,880 --> 00:16:57,280 Speaker 3: But we strive to be a very objective thought leader 273 00:16:57,320 --> 00:17:00,200 Speaker 3: in the industry put a lot of papers out are 274 00:17:00,800 --> 00:17:04,200 Speaker 3: the SIK to provide kind of a framework for how 275 00:17:04,240 --> 00:17:07,680 Speaker 3: to think about different investment topics. And so a couple 276 00:17:07,720 --> 00:17:10,840 Speaker 3: of years ago, with the growing interest in private and 277 00:17:10,920 --> 00:17:15,480 Speaker 3: the growing i'd say push of private out there, we 278 00:17:15,640 --> 00:17:21,000 Speaker 3: decided to actually buy data historical data from Burgess now 279 00:17:21,160 --> 00:17:27,240 Speaker 3: MSCI on private fund performance and study private performance across 280 00:17:27,640 --> 00:17:31,000 Speaker 3: four major asset classes, one of them being private credit. 281 00:17:31,359 --> 00:17:34,439 Speaker 3: So we looked at historical performance of private credit from 282 00:17:34,520 --> 00:17:38,440 Speaker 3: nineteen eighty to twenty twenty two, and what we found 283 00:17:38,520 --> 00:17:44,680 Speaker 3: there for private credit was that depending on the average 284 00:17:44,800 --> 00:17:48,440 Speaker 3: kind of historical ten year IRR is about ten percentage points, 285 00:17:48,480 --> 00:17:55,720 Speaker 3: which sounds appealing, But when you compare to hyat public 286 00:17:55,800 --> 00:18:00,000 Speaker 3: benchmarks like the Bloomberg Hi index, then what you see 287 00:18:00,080 --> 00:18:04,280 Speaker 3: is that public market equivalent or direct out of measures 288 00:18:04,320 --> 00:18:08,280 Speaker 3: comparing private to public performance are all kind of in 289 00:18:08,359 --> 00:18:12,320 Speaker 3: favor of the high index. There is no outperformance relative 290 00:18:12,359 --> 00:18:16,840 Speaker 3: to yield public bonds, which comes to tell you that 291 00:18:16,920 --> 00:18:22,080 Speaker 3: private credit is, at least historically has been a way 292 00:18:22,200 --> 00:18:27,400 Speaker 3: to get exposure to yield below investment grade credit. Does 293 00:18:27,480 --> 00:18:31,680 Speaker 3: private credit provide additional diversification beyond what's available in the 294 00:18:31,720 --> 00:18:35,520 Speaker 3: public market? Yes, absolutely. There are different bonds out there, 295 00:18:35,560 --> 00:18:39,200 Speaker 3: generally different issuers going for the private route versus public, 296 00:18:39,320 --> 00:18:42,479 Speaker 3: So there are some diversification benefits if you want to 297 00:18:42,520 --> 00:18:46,480 Speaker 3: add private credit to your public exposure. But of course 298 00:18:46,560 --> 00:18:50,320 Speaker 3: private comes with a lot of caveats and challenges, one 299 00:18:50,400 --> 00:18:54,880 Speaker 3: of which you mentioned very important ones for US prices, 300 00:18:56,480 --> 00:19:00,800 Speaker 3: frequent updates of prices, reliability of prices there it's not 301 00:19:00,960 --> 00:19:05,960 Speaker 3: by accident, it's called private. Also, lack of adequate diversification 302 00:19:06,080 --> 00:19:10,879 Speaker 3: because ultimately we cannot all own parts of all private companies, 303 00:19:11,280 --> 00:19:13,719 Speaker 3: you cannot get the full diversification you get in public 304 00:19:13,760 --> 00:19:18,399 Speaker 3: markets if you want to. And as a result, I think, well, 305 00:19:19,280 --> 00:19:22,960 Speaker 3: it will be interesting to see how private interesting private 306 00:19:23,000 --> 00:19:27,800 Speaker 3: credit develops, because there is kind of a an evergreen 307 00:19:27,880 --> 00:19:31,640 Speaker 3: value proposition for private It is has its own economic 308 00:19:31,680 --> 00:19:36,000 Speaker 3: function out there, but not everyone probably suited for an 309 00:19:36,040 --> 00:19:40,520 Speaker 3: investment in private people who might have short term immediate 310 00:19:41,359 --> 00:19:44,800 Speaker 3: liquidity needs, etc. Who cannot have a long horizon and 311 00:19:44,880 --> 00:19:46,840 Speaker 3: a for not to touch that part of money for 312 00:19:47,000 --> 00:19:52,520 Speaker 3: a long term might not be prepared for private investments 313 00:19:52,640 --> 00:19:57,200 Speaker 3: or well suited for private investments. In terms of information available, 314 00:19:57,320 --> 00:20:01,040 Speaker 3: definitely much less information available easily, and I think that's 315 00:20:01,359 --> 00:20:04,520 Speaker 3: why even in the when you look at buyouts, another 316 00:20:05,560 --> 00:20:09,919 Speaker 3: segment of the private market trades in the secondary market, 317 00:20:09,960 --> 00:20:13,960 Speaker 3: which attempts to mimic a public market right in terms 318 00:20:13,960 --> 00:20:18,359 Speaker 3: of getting some valuations for buyout stakes, et cetera, you 319 00:20:18,560 --> 00:20:23,000 Speaker 3: typically see haircuts of like ten fifteen percent, which speaks 320 00:20:23,040 --> 00:20:26,360 Speaker 3: to prices might not be as reliable they are as 321 00:20:26,400 --> 00:20:27,720 Speaker 3: they are in public markets. 322 00:20:27,960 --> 00:20:30,159 Speaker 1: We've had some guests recently talk about a two hundred 323 00:20:30,160 --> 00:20:34,479 Speaker 1: basis points premium in private markets against public I'm assuming 324 00:20:34,520 --> 00:20:38,000 Speaker 1: that mostly talking about loans there, but sounds like what 325 00:20:38,000 --> 00:20:40,680 Speaker 1: you're saying is that there is no relative value in 326 00:20:41,080 --> 00:20:44,199 Speaker 1: private and actually there's better risk just to return in 327 00:20:44,440 --> 00:20:47,719 Speaker 1: hial bonds versus private debt. Is that is that correct? 328 00:20:48,280 --> 00:20:51,760 Speaker 3: So it's very important what you compare private. 329 00:20:51,840 --> 00:20:52,000 Speaker 2: Too. 330 00:20:53,240 --> 00:20:56,359 Speaker 3: Many people might compare private to the Global or us 331 00:20:56,440 --> 00:21:00,280 Speaker 3: ag I Investment Grade Index. There you would see our 332 00:21:00,440 --> 00:21:04,440 Speaker 3: performance if you compare to Hyatt, you don't see our performance. Yes, 333 00:21:04,720 --> 00:21:08,040 Speaker 3: and it's kind of similar. On the private equity side, 334 00:21:09,359 --> 00:21:11,760 Speaker 3: many managers like to compare themselves to the S and 335 00:21:11,800 --> 00:21:14,880 Speaker 3: P five hundred. In our opinion, that's not an adequate 336 00:21:14,920 --> 00:21:19,359 Speaker 3: benchmark public benchmark. For private equity, you want to probably 337 00:21:19,359 --> 00:21:23,200 Speaker 3: take a look at well designed small happiness is small growth, 338 00:21:23,200 --> 00:21:26,280 Speaker 3: small value. And then the conclusion is very similar to 339 00:21:26,600 --> 00:21:29,399 Speaker 3: what we discuss for private credit. So it really matters 340 00:21:29,440 --> 00:21:30,639 Speaker 3: what you compare yourself to. 341 00:21:31,160 --> 00:21:33,919 Speaker 1: And also you mentioned it, you know, it really depends 342 00:21:33,920 --> 00:21:36,359 Speaker 1: on the kind of investors. Not suitable for everyone, but 343 00:21:36,880 --> 00:21:39,840 Speaker 1: you know you're an ETF shop. There are ETFs now 344 00:21:39,880 --> 00:21:41,320 Speaker 1: for private credit. What do you make of that? 345 00:21:42,000 --> 00:21:45,399 Speaker 3: We shall see, let's put it that way. In terms 346 00:21:45,440 --> 00:21:51,760 Speaker 3: of public bond ets, we see a lot of demand 347 00:21:51,800 --> 00:21:56,600 Speaker 3: for those. Obviously the largest ones are index focused, but 348 00:21:56,800 --> 00:22:00,159 Speaker 3: we now see growing demand for a kind of what 349 00:22:00,400 --> 00:22:04,880 Speaker 3: the types of ETFs with delivery dimensional systematic active, both 350 00:22:04,920 --> 00:22:06,679 Speaker 3: on the bond and on the equity side. We are 351 00:22:06,680 --> 00:22:12,320 Speaker 3: actually the largest systematic active ETF manager out there with 352 00:22:13,320 --> 00:22:19,640 Speaker 3: one hundred and seventeen plus a billion dollars in active ETFs. 353 00:22:20,080 --> 00:22:23,000 Speaker 3: We have forty one ETFs right now, thirty one on 354 00:22:23,000 --> 00:22:26,440 Speaker 3: the equity side, ten on the fixed income side, and 355 00:22:27,000 --> 00:22:29,120 Speaker 3: of the ten I was looking, which are kind of 356 00:22:29,280 --> 00:22:32,399 Speaker 3: all of them have positive flow netflows this year and 357 00:22:32,520 --> 00:22:37,040 Speaker 3: last year broadly used and the most used ones are 358 00:22:37,480 --> 00:22:42,520 Speaker 3: our US core fixed in committef along with global corporals 359 00:22:42,640 --> 00:22:47,800 Speaker 3: ultra short. So kind of a variety of segments where 360 00:22:48,160 --> 00:22:53,680 Speaker 3: people like to use a thoughtful, systematic yet active approach. 361 00:22:53,720 --> 00:22:57,160 Speaker 3: And I think for for focusing on public corporate bond 362 00:22:57,280 --> 00:23:02,280 Speaker 3: of public market bond markets, not just corporate government, corporate munis, 363 00:23:02,680 --> 00:23:07,040 Speaker 3: even mortgage backed securities. I think the ETF rapper is 364 00:23:07,080 --> 00:23:10,200 Speaker 3: a good wrapper, but of course even the ETF rapper 365 00:23:10,280 --> 00:23:14,280 Speaker 3: has to be well implemented. I think this is something 366 00:23:14,320 --> 00:23:18,000 Speaker 3: that I'm not sure your listeners have been aware of, 367 00:23:18,080 --> 00:23:21,879 Speaker 3: but there are some papers in the academic literature that 368 00:23:22,040 --> 00:23:25,560 Speaker 3: have looked at the baskets for fixed income ETFs in 369 00:23:25,600 --> 00:23:31,360 Speaker 3: the last years and suggests that looking primarily at index 370 00:23:31,440 --> 00:23:35,760 Speaker 3: of fixed income baskets that authorized participants, those that come 371 00:23:35,800 --> 00:23:38,240 Speaker 3: to the ETF you sure to create and redeem baskets, 372 00:23:38,560 --> 00:23:44,560 Speaker 3: create more shares of an EF essentially have been getting 373 00:23:44,560 --> 00:23:47,639 Speaker 3: an advantage in terms of pricing of these or picking bonds, 374 00:23:47,680 --> 00:23:51,800 Speaker 3: delivery which bonds to deliver some advantage over the issuer. 375 00:23:52,240 --> 00:23:55,639 Speaker 3: So when we set off our active ETFs, we are 376 00:23:55,800 --> 00:24:00,440 Speaker 3: very cautious to make sure that there's no all want 377 00:24:00,480 --> 00:24:05,040 Speaker 3: taking advantage of us in in that space of activitfs 378 00:24:05,040 --> 00:24:07,720 Speaker 3: where you have to kind of create baskets every day 379 00:24:07,720 --> 00:24:12,920 Speaker 3: throughout the day, negotiate baskets with APS, and we developed 380 00:24:12,920 --> 00:24:15,920 Speaker 3: a lot of infrastructure and criteria how to create our 381 00:24:16,000 --> 00:24:19,280 Speaker 3: baskets and in a typical dimensional men are also a 382 00:24:19,280 --> 00:24:23,280 Speaker 3: lot of infrastructure to track our execution of baskets over time. 383 00:24:23,680 --> 00:24:27,160 Speaker 3: So when we compare the bonds that we eventually bought 384 00:24:27,200 --> 00:24:31,840 Speaker 3: through a creation process from APS versus the bonds we 385 00:24:32,000 --> 00:24:34,560 Speaker 3: discarded and the bonds that kind of we started with 386 00:24:35,000 --> 00:24:40,600 Speaker 3: in the initial basket, we we don't find any underperformance, 387 00:24:40,680 --> 00:24:43,879 Speaker 3: no evidence of underperformance of what we bought versus what 388 00:24:44,800 --> 00:24:47,720 Speaker 3: we started with or what we discarded. Uh to the 389 00:24:47,800 --> 00:24:51,119 Speaker 3: point that we don't see APS pushing prices up to 390 00:24:51,200 --> 00:24:56,560 Speaker 3: deliver to acquire the securities we got, or to demonstrate 391 00:24:56,560 --> 00:25:00,920 Speaker 3: any informational advantage. And I think going forward, people shure 392 00:25:01,040 --> 00:25:04,320 Speaker 3: and hopefully will pay more attention to basket creation, because 393 00:25:04,359 --> 00:25:07,000 Speaker 3: this is where you might be leaving money on the 394 00:25:07,040 --> 00:25:08,880 Speaker 3: table if you're not careful enough. 395 00:25:09,480 --> 00:25:11,480 Speaker 1: You're right. The ETFs in credit have just become so 396 00:25:11,640 --> 00:25:14,440 Speaker 1: huge and so influential, not just for retail investors, also 397 00:25:14,440 --> 00:25:17,400 Speaker 1: for institutional investors using them to trade. But I'm interested 398 00:25:17,440 --> 00:25:19,600 Speaker 1: in in, you know, the active elements of that, because 399 00:25:19,600 --> 00:25:21,720 Speaker 1: the passive guys just tracking the index sing to be 400 00:25:21,760 --> 00:25:24,040 Speaker 1: doing just fine and they're probably very low cost. So 401 00:25:24,080 --> 00:25:26,600 Speaker 1: what's the edge you get from being active in this? 402 00:25:27,160 --> 00:25:30,480 Speaker 3: Yeah, And I love how you mentioned the first thing 403 00:25:30,480 --> 00:25:34,200 Speaker 3: people think about when when indexing comes to mind is cost, 404 00:25:34,320 --> 00:25:36,560 Speaker 3: low cost. And I was looking at kind of the 405 00:25:36,600 --> 00:25:40,440 Speaker 3: two largest ETFs out there are index ETFs. We all 406 00:25:40,480 --> 00:25:43,040 Speaker 3: know probably they are tickers and they're about three based 407 00:25:43,080 --> 00:25:47,359 Speaker 3: sports in expense ratio. And when people see that, they're like, 408 00:25:47,400 --> 00:25:49,679 Speaker 3: they're they're cheap, Like, why why should I go with 409 00:25:49,800 --> 00:25:56,240 Speaker 3: anything else? Well, because you can, again based on rigorous 410 00:25:56,280 --> 00:26:02,080 Speaker 3: academic research and top FOO implementation actually outperforms systematically benchmarks 411 00:26:02,119 --> 00:26:07,400 Speaker 3: net A fees and expenses over the long term. And 412 00:26:07,640 --> 00:26:11,560 Speaker 3: one of our the most popular flagship strategy of dimensional 413 00:26:11,760 --> 00:26:15,240 Speaker 3: in mutual fund format code investment grade portfolio in each 414 00:26:15,560 --> 00:26:21,320 Speaker 3: format code DFCF core fixed income. Both of those, the 415 00:26:21,400 --> 00:26:25,640 Speaker 3: longer one, the mutual font format since inception has outperformed 416 00:26:25,680 --> 00:26:28,480 Speaker 3: the same benchmark that the two biggest index city have struck, 417 00:26:29,040 --> 00:26:32,359 Speaker 3: the Bloomberg Us Act by thirty five to forty basis 418 00:26:32,359 --> 00:26:35,160 Speaker 3: sports per year NETA, FeAs and expenses over the last 419 00:26:35,200 --> 00:26:38,399 Speaker 3: ten years and since inception back in twenty eleven. And 420 00:26:38,440 --> 00:26:42,359 Speaker 3: I think this speaks to the point that there is 421 00:26:42,400 --> 00:26:45,840 Speaker 3: something you can do better. You can than indexing by 422 00:26:45,920 --> 00:26:49,919 Speaker 3: focusing on current information in for rates, to think about 423 00:26:49,960 --> 00:26:53,640 Speaker 3: where to position new flaws, where to kind of pursue 424 00:26:53,720 --> 00:26:57,000 Speaker 3: higher expector returns, how to control costs, how to manage 425 00:26:57,080 --> 00:27:01,520 Speaker 3: risks in the portfolio. And these are areas where the 426 00:27:01,640 --> 00:27:05,439 Speaker 3: indexing just falls behind and leaves money on the table 427 00:27:05,760 --> 00:27:11,200 Speaker 3: because it's index. Our index approaches are simply thinking about 428 00:27:11,280 --> 00:27:16,480 Speaker 3: sampling from the huge index universe, but then not taking 429 00:27:16,520 --> 00:27:19,639 Speaker 3: into account real time market information as we discussed, to 430 00:27:19,760 --> 00:27:24,639 Speaker 3: identify where the best opportunities highest expected returns are in 431 00:27:24,680 --> 00:27:29,240 Speaker 3: a systematic manner, or how to monitor credit quality on 432 00:27:29,280 --> 00:27:33,320 Speaker 3: a real time basis, or how to seek for being 433 00:27:33,400 --> 00:27:35,840 Speaker 3: flexible in what bonds to buy and sell to get 434 00:27:36,119 --> 00:27:42,639 Speaker 3: the best trading costs possible for the index approach, the 435 00:27:42,680 --> 00:27:48,479 Speaker 3: tradeoff is always tracking error versus costs or taxes depending 436 00:27:48,520 --> 00:27:52,240 Speaker 3: on the wrapper. For us, that's not the right trade off. 437 00:27:52,320 --> 00:27:54,840 Speaker 3: As we talk, tradeoffs are very important, but the right 438 00:27:54,880 --> 00:27:58,240 Speaker 3: tradeoff should be expected returns versus costs and risks. 439 00:27:58,480 --> 00:28:00,719 Speaker 2: And then on the return side, I mean could investor 440 00:28:00,920 --> 00:28:03,159 Speaker 2: expect from those Well, what. 441 00:28:03,080 --> 00:28:06,919 Speaker 3: I mentioned is for our investment great portfolio here in 442 00:28:06,960 --> 00:28:10,439 Speaker 3: the US has outperformed the Bloomberg Us Act by thirty 443 00:28:10,480 --> 00:28:13,639 Speaker 3: five to forty basis points. Again native fees and expenses, 444 00:28:13,880 --> 00:28:18,480 Speaker 3: So forget about industry, the feed differential, expense oration differential 445 00:28:18,840 --> 00:28:22,080 Speaker 3: versus the bloomberg Us Act over the last ten years 446 00:28:22,119 --> 00:28:27,800 Speaker 3: since inception almost fifteen years now. So I think it's 447 00:28:27,840 --> 00:28:31,520 Speaker 3: a it's a good trade off for many advisors and 448 00:28:31,560 --> 00:28:34,879 Speaker 3: many advisors in their end clients, many institutional clients. And 449 00:28:35,280 --> 00:28:38,200 Speaker 3: as a result, we've seen kind of growing interest in 450 00:28:38,360 --> 00:28:43,120 Speaker 3: systematic active fixed income. I think in fixed income, more 451 00:28:43,160 --> 00:28:46,920 Speaker 3: people are aware of the rigidities and flaws of indexing. 452 00:28:48,280 --> 00:28:51,120 Speaker 3: As a result, more more people know about kind of 453 00:28:51,160 --> 00:28:54,160 Speaker 3: the maturity cutoff where everybody has to sell one year 454 00:28:54,720 --> 00:28:57,600 Speaker 3: or once a bond is down organded, everybody has to 455 00:28:57,680 --> 00:29:00,560 Speaker 3: kind of sell it out of their portfolio because it's 456 00:29:00,600 --> 00:29:03,760 Speaker 3: leaving the index for investment BRAN and we still see 457 00:29:03,960 --> 00:29:09,240 Speaker 3: meaningful costs around those transitions. So people are open to 458 00:29:09,360 --> 00:29:13,320 Speaker 3: something better than indexing. But at the same time, people 459 00:29:14,120 --> 00:29:19,200 Speaker 3: often get disappointed with the inability of traditional active to 460 00:29:19,320 --> 00:29:24,600 Speaker 3: consistently systematically outgas the market, and as a result are 461 00:29:24,640 --> 00:29:27,120 Speaker 3: looking for an approach. It doesn't claim to have a 462 00:29:27,160 --> 00:29:30,560 Speaker 3: crystal ball, but see systematically based on science to deliver 463 00:29:30,960 --> 00:29:34,920 Speaker 3: with the understanding that it won't necessarily outperform the market 464 00:29:35,000 --> 00:29:36,960 Speaker 3: day in and day out, but over the long term, 465 00:29:37,520 --> 00:29:41,720 Speaker 3: based on academic principles and research, it should deliver higher 466 00:29:41,760 --> 00:29:42,880 Speaker 3: expected returns. 467 00:29:43,320 --> 00:29:48,320 Speaker 1: The strategy kind of outline quality, you know, transparency, liquidity, 468 00:29:48,320 --> 00:29:51,240 Speaker 1: all this stuff. That's basically what everybody wants right now, 469 00:29:51,280 --> 00:29:53,560 Speaker 1: and there's just so many people chasing it. How do 470 00:29:53,600 --> 00:29:56,240 Speaker 1: you get your edge in that? I mean, how do 471 00:29:56,280 --> 00:29:58,600 Speaker 1: you get your allocation? How do you kind of muscle 472 00:29:58,680 --> 00:30:02,160 Speaker 1: in when there's so much you know, pressure to buy, 473 00:30:02,200 --> 00:30:06,080 Speaker 1: there's so much capital to allocate. You know, you have 474 00:30:06,120 --> 00:30:09,200 Speaker 1: to be selective obviously, but what's what's the strategy in 475 00:30:09,320 --> 00:30:12,800 Speaker 1: terms of just like getting enough assets to buy. 476 00:30:13,480 --> 00:30:17,160 Speaker 3: Yeah, how do you execute efficiently right now? If other 477 00:30:17,240 --> 00:30:22,040 Speaker 3: people are also focusing let's say, only government bonds or 478 00:30:22,120 --> 00:30:26,080 Speaker 3: higher quality in a very short term, I say, go 479 00:30:26,200 --> 00:30:30,440 Speaker 3: back to kind of the key principles of our value 480 00:30:30,440 --> 00:30:34,600 Speaker 3: ads in portfolio management and training, being flexible. We believe 481 00:30:34,600 --> 00:30:39,160 Speaker 3: that they measure that optionality. Flexibility adds value as a result. 482 00:30:39,560 --> 00:30:41,880 Speaker 3: If you are starting the day with one hundred or 483 00:30:41,920 --> 00:30:47,240 Speaker 3: two hundred eligible bonds to buy in a given portfolio, 484 00:30:47,560 --> 00:30:51,240 Speaker 3: or a thousand for that matter, being able to walk 485 00:30:51,280 --> 00:30:54,880 Speaker 3: away from a potential trade because you know that there 486 00:30:54,960 --> 00:30:58,800 Speaker 3: are similar bonds with similar characteristics that you might be 487 00:30:59,240 --> 00:31:02,880 Speaker 3: equally happy to buy today. That is what helps us 488 00:31:02,920 --> 00:31:08,280 Speaker 3: in today's environment where others might be kind of looking 489 00:31:08,320 --> 00:31:11,600 Speaker 3: for similar type bonds at the same time. Uh, The 490 00:31:11,640 --> 00:31:16,640 Speaker 3: ability to be flexible, be patient, and not chase an 491 00:31:16,640 --> 00:31:21,160 Speaker 3: individual specific bond. As we discussed earlier, many bonds don't 492 00:31:21,160 --> 00:31:24,640 Speaker 3: trade on a given day, so if you are chasing 493 00:31:24,640 --> 00:31:28,800 Speaker 3: as particular, body are likely to push prices for that bond. 494 00:31:29,720 --> 00:31:33,680 Speaker 3: Whereas if you are flexible, you if you view multiple 495 00:31:33,720 --> 00:31:36,200 Speaker 3: bonds is substitutes for each other when you go to 496 00:31:36,280 --> 00:31:39,080 Speaker 3: buy or sell. That gives you more flexibility, and as 497 00:31:39,120 --> 00:31:43,160 Speaker 3: I said, this flexibility ultimately gets reflected in better execution. 498 00:31:44,160 --> 00:31:46,920 Speaker 3: We've been monitoring that for years and we see kind 499 00:31:46,960 --> 00:31:51,240 Speaker 3: of year in and year out as paying off, and 500 00:31:51,400 --> 00:31:55,440 Speaker 3: especially kind of in April, as I mentioned, our relative 501 00:31:55,480 --> 00:31:58,560 Speaker 3: trade price adventage was higher than in the in the 502 00:31:58,600 --> 00:32:02,280 Speaker 3: previous three months of the year. Again, when periods are 503 00:32:02,400 --> 00:32:05,120 Speaker 3: highly votile, this is what we see both inequities and 504 00:32:05,200 --> 00:32:08,240 Speaker 3: fixed income. A lot of people tend to panic, the 505 00:32:08,320 --> 00:32:12,680 Speaker 3: many immediacy try to kind of rush to market, and 506 00:32:13,080 --> 00:32:17,520 Speaker 3: people who are flexible, who are long term focused and discipline, 507 00:32:18,320 --> 00:32:20,840 Speaker 3: tend to benefit in those environments. 508 00:32:21,200 --> 00:32:22,960 Speaker 1: Is there a way that you can get an edge 509 00:32:22,960 --> 00:32:24,640 Speaker 1: over the competition when we hear a lot of people 510 00:32:24,680 --> 00:32:29,560 Speaker 1: talking about CMBs, about MBS, about structured, about asset based finance, 511 00:32:29,840 --> 00:32:31,520 Speaker 1: but all these other things that they're trying to get 512 00:32:31,760 --> 00:32:35,680 Speaker 1: and you know, generate alpha from in terms of you know, 513 00:32:35,760 --> 00:32:37,800 Speaker 1: standing out when it comes to doing better than the 514 00:32:37,840 --> 00:32:39,800 Speaker 1: index and best than everyone else for returns. How do 515 00:32:39,880 --> 00:32:41,600 Speaker 1: you get your edge in. 516 00:32:41,640 --> 00:32:45,600 Speaker 3: Mortgage back securities? I should have mentioned that earlier. We 517 00:32:45,720 --> 00:32:48,280 Speaker 3: do invest now in mortgage back securities as well in 518 00:32:48,280 --> 00:32:52,360 Speaker 3: some of our strategies. I think it's a fascinating asset class. 519 00:32:52,960 --> 00:32:57,719 Speaker 3: But we started investing in mortgage back securities only only 520 00:32:57,840 --> 00:33:02,640 Speaker 3: in twenty twenty. Again, if you track our evolution because 521 00:33:02,920 --> 00:33:07,160 Speaker 3: transparency price transparency arrives to the NBS and TBA market 522 00:33:07,400 --> 00:33:12,040 Speaker 3: in twenty eleven twenty twelve, when those transactions became mandatory 523 00:33:12,080 --> 00:33:14,960 Speaker 3: to report to trades, similar to what happened to corporate 524 00:33:15,000 --> 00:33:18,680 Speaker 3: bonds about ten years earlier. And so once we accumulated 525 00:33:18,880 --> 00:33:23,400 Speaker 3: enough price information and study or able to study the 526 00:33:23,760 --> 00:33:29,880 Speaker 3: MBSTBA market historically and essentially see that the same framework 527 00:33:29,920 --> 00:33:33,520 Speaker 3: for what drives expected returns in corporate government immuni bonds 528 00:33:34,160 --> 00:33:36,480 Speaker 3: can be applied. It is well supported in the data 529 00:33:36,520 --> 00:33:42,480 Speaker 3: for mbstbas. We started investing in nbs via TBA is 530 00:33:42,520 --> 00:33:45,800 Speaker 3: actually because they are ninety percent of the trading happens 531 00:33:45,800 --> 00:33:50,840 Speaker 3: through the TBA to be the announced derivatives market. And 532 00:33:51,440 --> 00:33:54,400 Speaker 3: we also engage with one of the top experts of 533 00:33:54,600 --> 00:33:57,400 Speaker 3: MBS in academy, again going back to our strong ties 534 00:33:57,400 --> 00:34:02,560 Speaker 3: with academia, Professor Sung from John Hopkins Carry Business School, 535 00:34:02,600 --> 00:34:06,160 Speaker 3: and we hold together a paper on the drivers of 536 00:34:06,280 --> 00:34:10,239 Speaker 3: Expected Returns of MBS, which essentially says, again kind of 537 00:34:10,880 --> 00:34:15,120 Speaker 3: field and roll down, but customized to the world of 538 00:34:15,320 --> 00:34:21,319 Speaker 3: MBS is with the prepayment kind of potential, there still 539 00:34:21,360 --> 00:34:25,320 Speaker 3: are the main drivers of differences in expected returns within MBS, 540 00:34:25,560 --> 00:34:29,279 Speaker 3: and this is kind of where we seek to have, say, 541 00:34:29,600 --> 00:34:32,719 Speaker 3: seek out performance within that spectrum right now in our 542 00:34:32,800 --> 00:34:37,719 Speaker 3: portfolios that invests in MBS tvas is basically by identifying 543 00:34:37,840 --> 00:34:41,959 Speaker 3: tvas with higher expected returns and allocating more to them 544 00:34:42,280 --> 00:34:47,120 Speaker 3: within our TVA portfolios. So again going back to having 545 00:34:47,160 --> 00:34:53,120 Speaker 3: a robust, academic scientific framework for how to seek systematically 546 00:34:53,440 --> 00:34:57,440 Speaker 3: higher returns and then applying in a very thoughtful manner, 547 00:34:58,040 --> 00:35:01,320 Speaker 3: because even though TBAs are the second most liquid market 548 00:35:01,360 --> 00:35:05,000 Speaker 3: out there after US treasurers, in case your listeners didn't 549 00:35:05,080 --> 00:35:10,200 Speaker 3: know even there, you have to be very thoughtful about execution. 550 00:35:10,560 --> 00:35:14,160 Speaker 3: You cannot be just demanding a particular TBA contract today 551 00:35:14,200 --> 00:35:16,680 Speaker 3: in huge qualities and expect that you're not going to 552 00:35:16,760 --> 00:35:18,480 Speaker 3: have any impact on the market. 553 00:35:18,880 --> 00:35:20,680 Speaker 1: And for those out there, I don't know what TBA is. 554 00:35:20,760 --> 00:35:21,719 Speaker 1: What is it? 555 00:35:21,719 --> 00:35:25,040 Speaker 3: It is an abbreviation for to be announced and it's 556 00:35:25,080 --> 00:35:28,440 Speaker 3: a very interesting mechanism. Maybe we should spend like a 557 00:35:28,480 --> 00:35:31,680 Speaker 3: couple of minutes just explaining it to people to bring 558 00:35:32,920 --> 00:35:37,080 Speaker 3: more liquidity and lower execution costs to this mortgage backed 559 00:35:37,080 --> 00:35:40,560 Speaker 3: securities market. So when I get got a mortgage on 560 00:35:40,640 --> 00:35:43,040 Speaker 3: my house, and I'm sure you guys have probably mortgages 561 00:35:43,080 --> 00:35:45,920 Speaker 3: on your house. Is the band that lends the mortgage 562 00:35:45,960 --> 00:35:49,520 Speaker 3: typically doesn't hold on to death. Mortgage sends sells it 563 00:35:49,600 --> 00:35:53,080 Speaker 3: to one of the three agencies out there in the US. 564 00:35:53,120 --> 00:35:56,640 Speaker 3: This is specific to the US market, and those agencies 565 00:35:56,719 --> 00:36:00,399 Speaker 3: package many mortgages, typically of the same term, so let's 566 00:36:00,400 --> 00:36:04,600 Speaker 3: say thirty or fifteen year with similar coupons, payments, so 567 00:36:05,040 --> 00:36:09,360 Speaker 3: interest rates on a mortgage, and they pass them to 568 00:36:10,040 --> 00:36:15,719 Speaker 3: investors out there and securitize that. And as you can imagine, 569 00:36:15,840 --> 00:36:19,319 Speaker 3: every month there is a new potentially package out there 570 00:36:19,360 --> 00:36:22,120 Speaker 3: from one of the three agencies with different terms, with 571 00:36:22,200 --> 00:36:27,040 Speaker 3: a different coupon. Lots of packages training issued over many, 572 00:36:27,040 --> 00:36:30,600 Speaker 3: many vintages, So the market is quite dispersed for mortgage 573 00:36:30,640 --> 00:36:35,359 Speaker 3: backed securities if you are One way to bring transparency 574 00:36:35,400 --> 00:36:38,520 Speaker 3: to that market is actually to create an instrument that 575 00:36:39,800 --> 00:36:42,440 Speaker 3: aggregates a lot of those characteristics, and that's what the 576 00:36:42,520 --> 00:36:46,800 Speaker 3: TBA delrivative does. It basically says, I promise to deliver 577 00:36:47,080 --> 00:36:49,440 Speaker 3: to you in a month or in two or three months, 578 00:36:50,000 --> 00:36:54,239 Speaker 3: a package of mortgages that is issued by one of 579 00:36:54,280 --> 00:36:57,719 Speaker 3: the three agencies that has this coupon let's say five 580 00:36:57,760 --> 00:37:01,520 Speaker 3: point five percent and has thirty year term, oh you know, 581 00:37:02,000 --> 00:37:04,680 Speaker 3: up until a few days before delivery, is just those 582 00:37:04,719 --> 00:37:09,360 Speaker 3: three characteristics. And by limiting the information exchanged across market 583 00:37:09,400 --> 00:37:13,439 Speaker 3: participants to those three characteristics, it makes the market much 584 00:37:13,480 --> 00:37:17,399 Speaker 3: more liquid. And as a result, tvas are very very 585 00:37:17,440 --> 00:37:21,520 Speaker 3: cost efficient to trade and a highly highly liquid market. 586 00:37:21,800 --> 00:37:25,239 Speaker 3: And one little interesting nugget on that is, when we 587 00:37:25,320 --> 00:37:29,319 Speaker 3: started researching MBS and tvas, I was surprised to see 588 00:37:29,320 --> 00:37:32,360 Speaker 3: that one of my huge mentors in life, can French, 589 00:37:32,360 --> 00:37:36,319 Speaker 3: professor Ken French from Dartmouth College, he actually had a 590 00:37:36,360 --> 00:37:41,279 Speaker 3: paper on tvas or related back in the day where 591 00:37:41,320 --> 00:37:46,080 Speaker 3: they made a comparison basically with diamonds traded in a 592 00:37:46,160 --> 00:37:50,600 Speaker 3: black bags in transparent bags similarly to reduced kind of 593 00:37:50,920 --> 00:37:55,560 Speaker 3: informational advantures or cross market participants in increased liquidity of 594 00:37:55,640 --> 00:37:59,160 Speaker 3: trading diamonds. And I found that comparison very fascinating. 595 00:37:59,600 --> 00:38:01,920 Speaker 2: Maybe to talk a little bit about about risk, I 596 00:38:01,920 --> 00:38:05,400 Speaker 2: mean we're you know, fixing of investors and or analysts 597 00:38:05,400 --> 00:38:08,319 Speaker 2: and always worry about what could go wrong? But what 598 00:38:08,600 --> 00:38:11,960 Speaker 2: are the key risks that you see right now in 599 00:38:12,000 --> 00:38:12,440 Speaker 2: the market. 600 00:38:13,000 --> 00:38:15,640 Speaker 3: I'd say they mentioned when we think about key risks 601 00:38:15,640 --> 00:38:19,320 Speaker 3: in portfolio, we always think the number one risk in 602 00:38:19,400 --> 00:38:25,120 Speaker 3: any portfolio is probably concentration and the risk that your 603 00:38:25,160 --> 00:38:30,080 Speaker 3: portfolio will be driven down by the underperformance or default 604 00:38:30,120 --> 00:38:35,359 Speaker 3: of particular UH issuer. And so from that perspective, the 605 00:38:35,400 --> 00:38:37,799 Speaker 3: best and the best way to address that risk of 606 00:38:37,880 --> 00:38:46,920 Speaker 3: concentration is diversification. Diversification across issuers, issues, garanteurs, UH sectors, industries, 607 00:38:47,400 --> 00:38:50,840 Speaker 3: countries of visions if if allowed, and currency of visions 608 00:38:50,880 --> 00:38:54,680 Speaker 3: if allowed. I think that's kind of always number one. 609 00:38:55,160 --> 00:38:55,319 Speaker 2: Uh. 610 00:38:55,480 --> 00:39:00,120 Speaker 3: Think about concentration, then liquidity obviously, how liquid are the 611 00:39:00,160 --> 00:39:05,040 Speaker 3: bones you're holding? Can you relatively quickly trade them around? 612 00:39:05,880 --> 00:39:08,200 Speaker 3: And of course when you're running an ITA for a 613 00:39:08,280 --> 00:39:11,919 Speaker 3: mutual fund, that's top of mind to have. Also kind 614 00:39:11,920 --> 00:39:16,239 Speaker 3: of a good pocket of liquidity in a portfolio, even 615 00:39:16,280 --> 00:39:18,680 Speaker 3: if it's long term, that can be turned around and 616 00:39:18,719 --> 00:39:24,319 Speaker 3: satisfy redemptions for example a quick notice. And after that, 617 00:39:24,400 --> 00:39:30,000 Speaker 3: I would say it's just generally the understanding that for us, 618 00:39:30,360 --> 00:39:34,440 Speaker 3: the other risk is obviously that the academic kind of 619 00:39:34,480 --> 00:39:38,919 Speaker 3: driven relationships in the data that we are pursuing turnspread 620 00:39:39,280 --> 00:39:43,600 Speaker 3: predicting turn premium credit spread predicting credit premiums might not 621 00:39:45,360 --> 00:39:50,080 Speaker 3: manifest themselves in the predicted by consistent with theory manner 622 00:39:50,760 --> 00:39:54,520 Speaker 3: every day, every month, every year, you might have a 623 00:39:54,600 --> 00:39:58,880 Speaker 3: period of one, two, three years underperformance because terms spread, 624 00:39:59,000 --> 00:40:02,800 Speaker 3: why don't but premium dinner wide after that? Instead it 625 00:40:02,960 --> 00:40:07,600 Speaker 3: narrowed and so building a roll bust well diversified portfolios 626 00:40:07,600 --> 00:40:11,160 Speaker 3: that even if those relations we are pursuing, based again 627 00:40:11,200 --> 00:40:15,759 Speaker 3: on academic theory and research, do not show up in 628 00:40:15,800 --> 00:40:18,160 Speaker 3: the data over a given period of time, you're still 629 00:40:18,239 --> 00:40:21,480 Speaker 3: left with a very good portfolio to hold, and applies 630 00:40:21,560 --> 00:40:24,600 Speaker 3: to both our equities and our fixing of so broadly 631 00:40:24,640 --> 00:40:29,960 Speaker 3: diversified systematic approach that will deliver kind of minimum costs 632 00:40:30,040 --> 00:40:35,960 Speaker 3: the good portfolio to hold regardless of what the future brings. 633 00:40:36,440 --> 00:40:38,279 Speaker 1: Do you worry it's all about the risks that might 634 00:40:38,320 --> 00:40:40,520 Speaker 1: be brewing in private credit in terms of you know, 635 00:40:40,520 --> 00:40:43,200 Speaker 1: the risks that you cannot see that building your potential defaults. 636 00:40:43,239 --> 00:40:44,920 Speaker 1: There's a lot of payment and kind a lot of 637 00:40:45,000 --> 00:40:47,839 Speaker 1: amendments and things you can't see. But also essentially it's 638 00:40:47,880 --> 00:40:50,960 Speaker 1: taking away supply that maybe further distorts pricing in the 639 00:40:50,960 --> 00:40:51,640 Speaker 1: public markets. 640 00:40:53,440 --> 00:40:56,759 Speaker 3: Whether I worry or not, I think that all of 641 00:40:56,800 --> 00:41:01,960 Speaker 3: those potential developments are there. The word is that actual 642 00:41:02,000 --> 00:41:06,719 Speaker 3: investors in the marketplace have are reflected in kind of 643 00:41:07,880 --> 00:41:11,239 Speaker 3: their trading decisions, bias and cells of different types of 644 00:41:11,239 --> 00:41:17,080 Speaker 3: bonds out there. If edything, some people might get disappointed with, 645 00:41:17,320 --> 00:41:21,320 Speaker 3: again some of the attributes of private credit or private 646 00:41:21,360 --> 00:41:23,919 Speaker 3: in general, if they are not going with enough kind 647 00:41:23,920 --> 00:41:27,879 Speaker 3: of research on what that type of investment can representing 648 00:41:27,960 --> 00:41:33,480 Speaker 3: their portfolio and in their investment experience. And I think 649 00:41:33,520 --> 00:41:36,359 Speaker 3: we all need to also kind of appreciate even more 650 00:41:36,520 --> 00:41:40,560 Speaker 3: the benefits of public markets, the transparency that we talked 651 00:41:40,560 --> 00:41:44,759 Speaker 3: about a lot today that gives us any immediacy in 652 00:41:44,840 --> 00:41:50,560 Speaker 3: liquidity that are instrumental to most people's needs when it 653 00:41:50,600 --> 00:41:51,400 Speaker 3: comes to investing. 654 00:41:51,760 --> 00:41:54,280 Speaker 1: And as you say, your sort of more scientific approach 655 00:41:54,360 --> 00:41:56,239 Speaker 1: is quite different to a lot of guests we have 656 00:41:56,320 --> 00:41:59,480 Speaker 1: on this show. If you had to kind of say 657 00:41:59,560 --> 00:42:03,160 Speaker 1: how you most contrarian on credit, I mean, how would 658 00:42:03,160 --> 00:42:06,279 Speaker 1: you describe that? Are you contrarian at all? And if so, 659 00:42:06,520 --> 00:42:07,600 Speaker 1: how would you characterize that? 660 00:42:08,360 --> 00:42:12,520 Speaker 3: I would say that our focus, our location to credit 661 00:42:13,040 --> 00:42:18,239 Speaker 3: depends on the current curves of their spreads and curves. 662 00:42:18,680 --> 00:42:23,120 Speaker 3: So in periods like now, where credit spreads are not 663 00:42:23,960 --> 00:42:28,120 Speaker 3: as wide as they have been historically, we are a 664 00:42:28,200 --> 00:42:31,000 Speaker 3: little bit less focused on credit and more on governments, 665 00:42:31,200 --> 00:42:36,600 Speaker 3: so you could say a little bit more focused on government. 666 00:42:37,000 --> 00:42:41,600 Speaker 3: And then in you know, in periods or in areas 667 00:42:41,640 --> 00:42:45,440 Speaker 3: of the market where we see steeper credit curves, so 668 00:42:45,560 --> 00:42:51,719 Speaker 3: intermediate segment us for example, generally steeper than short term 669 00:42:52,040 --> 00:42:55,400 Speaker 3: within a credit strategy would be kind of going longer 670 00:42:55,400 --> 00:42:59,920 Speaker 3: corporate bonds and less shorter corporate bonds, So depends on 671 00:43:00,160 --> 00:43:03,719 Speaker 3: market conditions. How have your corporate bonds? 672 00:43:03,760 --> 00:43:07,400 Speaker 1: Great stuff, Savina Resova, co, Chief investment Officer and global 673 00:43:07,400 --> 00:43:09,400 Speaker 1: head of Research at Dimensional Fund Advisors. Has been a 674 00:43:09,400 --> 00:43:11,680 Speaker 1: pleasure having you on the credit edge. Many thanks, thank you, 675 00:43:11,960 --> 00:43:13,920 Speaker 1: and of course we're very grateful to Jehan ef Coupin 676 00:43:14,040 --> 00:43:16,720 Speaker 1: from Bloomberg Intelligence. Thank you so much for joining us today. 677 00:43:16,960 --> 00:43:20,359 Speaker 1: Welcome for even more credit market analysis and insight. Read 678 00:43:20,400 --> 00:43:23,200 Speaker 1: all of Jean Eve Coupin's great work on the Bloomberg terminal. 679 00:43:23,480 --> 00:43:26,200 Speaker 1: Bloomberg Intelligence is part of our research department, with five 680 00:43:26,280 --> 00:43:30,040 Speaker 1: hundred analysts and strategists working across all markets. Coverage includes 681 00:43:30,080 --> 00:43:32,600 Speaker 1: over two thousand equities and credits and outlooks on more 682 00:43:32,600 --> 00:43:36,919 Speaker 1: than ninety industries and one hundred market industries, currencies, and commodities. 683 00:43:37,360 --> 00:43:40,480 Speaker 1: Please do subscribe to The Credit Edge wherever you get 684 00:43:40,480 --> 00:43:43,319 Speaker 1: your podcasts. We're on Apples, Spotify, and all other good 685 00:43:43,480 --> 00:43:47,799 Speaker 1: podcast providers, including the Bloomberg Terminal at bpod Go. Give 686 00:43:47,880 --> 00:43:50,240 Speaker 1: us a review, tell your friends, or email me directly 687 00:43:50,280 --> 00:43:53,760 Speaker 1: at Jcrombie eight at Bloomberg dot net. I'm James Cromby. 688 00:43:53,800 --> 00:43:56,440 Speaker 1: It's been a pleasure having you join us again next 689 00:43:56,440 --> 00:44:14,920 Speaker 1: week on the Credit Edge