06.17.2010 / Fixed Income Markets Performing Well

The general theme in fixed income markets over the last year was a significant improvement in the prices of riskier asset classes. Investors moved very rapidly from extreme risk aversion at the height of the financial crisis in 2008 and early 2009, to a pursuit of higher yields in riskier assets as the crisis abated. Yield spreads tightened across all fixed income asset classes as the economy continued to display steady improvement.

"Individual security selection will become increasingly important in the performance of fixed income portfolios."

Now, with the recent concerns over European sovereign debt and the perceived potential for a double-dip recession very suddenly re-emerging, a flight-to-quality bias has resurfaced in the fixed income markets in recent weeks. As a result, U.S. Treasury and higher credit quality securities have outperformed riskier fixed income securities during the first part of the second quarter. Investors can be whip-sawed in these volatile times and may experience very poor returns by chasing a fast-moving market.

The Tributary Capital Management Aggregate Fixed Income Strategy has performed very well in this environment, as its holdings are generally higher credit quality than those of its peers. Through April, the Strategy’s year-to-date total return was 3.65%, while its benchmark index, the Barclays Capital Aggregate Index returned 2.84%.

We believe the majority of spread tightening and price appreciation across the broad universe of fixed income assets is likely behind us. Individual security selection will become increasingly important in the performance of fixed income portfolios. We believe our emphasis on maintaining a yield advantage over the benchmark index while still providing higher credit quality than our peers should lead to consistently strong performance in a highly volatile market.

For information on Tributary Capital Management please visit or email

Comments are provided as general market commentary and should not be considered investment advice or predictive of any future market performance.  Past performance does not guarantee future results.

Investments are: Not FDIC Insured • May Go Down in Value • Not a Deposit • Not Guaranteed By the Bank • Not Insured By Any Federal Government Agency

Posted at 09:14 AM | Permalink
Post A Comment

The views expressed on this site may not reflect the views held by First National Bank of Omaha or any of its affiliates. The information provided through this website is not a substitute for any personal advice from a licensed professional. Use of any information or advice shall be solely at the user's own risk.

We welcome your comments. All comment submissions will be reviewed prior to being posted. If the comments are posted, they may be removed at any time. Comments will not be approved if they contain, include or involve any of the following: Obscenity; Crude, vulgar or offensive language and/or symbols; Gang signs or symbols; Derogatory characterizations of any ethnic, racial, sexual or religious groups, personal attacks of any kind towards others; Trespass or the violation of other people's rights or property; Illegal (e.g., discriminatory, harassing) or inappropriate activity, behavior or conduct (e.g., inflicting emotional distress); Any other content that is or could be considered inappropriate, unsuitable or offensive, or clearly "off-topic" as determined by First National Bank of Omaha. To protect your own privacy and the privacy of others, please do not include personally identifiable information such as Social Security Number, phone number or email address in the body of your comment.

For account related questions, please log in to First National Online at and use the secure email located in Contact Us.