Brendan Clark, president of Clark Capital Management Group, has been using exchange-traded funds to take advantage of what the bond market is offering, and right now that means high yield.
“In the interest rate environment we're in and moving into, which is dramatically different from the past 30 years, an opportunistic approach is required,” he said.
Mr. Clark said that ETFs allow him to manage a fixed-income separately managed account portfolio dynamically.
Using a relative-strength research process, he moves freely and sometimes quickly between exposure to high-yield and high-quality corporate bonds and short-term Treasuries.
The portfolio is favoring high yield, with 45% allocations to iShares iBoxx High Yield Corporate Bond ETF (HYG) and SPDR Barclays Capital High Yield Bond ETF (JNK).
The portfolio is rounded out with 5% allocations to iShares JPMorgan USD Emerging Markets Bond ETF (EMB) and iShares S&P U.S. Preferred Stock Index ETF (PFF).
The strategy, which Mr. Clark launched in 2004, took on its high-yield slant early last month. Before that was a three-month stretch during which the portfolio tilted toward higher-quality bonds.
Although the portfolio has seen some major adjustments this year, it was “solidly in the high-yield camp” from April 2009 through August 2011, Mr. Clark said.
For the first six months of this year, the separate account gained 2.6%, net of fees, which compares with a 2.4% gain by the Barclays U.S. Aggregate Bond Index over the same period.
Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry (InvestmentNews.com/ pmperspectives).
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