AQS Performance and Perspective - August, 2017

 

AQS| Asset Management for Insurers

 

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Performance

  

Client 1         Client 2

  

Client 3         Client 4

  

Client 5         Client 6

 

Client 7         Client 8

 

Client 9

  

Managed portfolio metrics updated monthly.

 

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Corporate Issuance 12 months

  

Corporate Issues

Last 30 Days

Driving the Bus - Are We Being Taken for a Ride?

We can wring our hands about the Fed but it isn't the central bank pushing rates down.  We make a case for watching fund flows in this month's AQS Point of View.

 

FedSpeak

Fed July 25-26 meeting minutes were released August 16.  The mercifully abbreviated press release covers the high points.  The operative words "The Committee expects to begin implementing its balance sheet normalization program relatively soon, provided that the economy evolves broadly as anticipated;", suggests UN-reinvestment in the 4th quarter.

 

What, Me Worry? Frothy Fixed Income

You may not know it but MAD Magazine did not coin the phrase "What, me worry?"  Today, the iconic phrase is best applied to fixed income investors - the bus drivers referenced above - that must respond to fund inflows.  We take a deep dive on some "frothy" examples in the end of this month's AQS Point of View.

 

Swimming Upstream?

Jeff Gundlach, CEO of DoubleLine got vocal about liquidity, frothishness (yes, made it up), and capping the size of his total return fund.   What's up?  He believes size matters.  He wants a smaller bus.

 

AQS vs. Select Barclay's Total Return Data

 

 

The AQS Corporate Governance Workshop - Pittsburgh, September, 21

 

http://files.constantcontact.com/acbfd869001/74b3bdbe-f1ec-4136-b4c1-ce60f5ccb7d1.jpgAQS will be hosting a corporate governance workshop for executive management and directors.  8 speakers have 40 minutes each to state their case and answer questions.  Learn more about this workshop.

 

Last spring, AQS hosted its annual insurance symposium in Austin.  Speakers included A.M.Best, Moody's, Fitch, Goldman Sachs, the NAIC and the young man to the right who explained how he has embraced technology (LinkedIn) to reach prospects.  Want to see who else showed up?

 

We hope you will make plans to attend our Pittsburgh workshop.  Encourage others in your organization as well.  It's a single day and there is no charge to attend. 

 

 

The Gasoline Tipping Point?

 

http://files.constantcontact.com/acbfd869001/f635c537-c52f-4cdc-8e95-803708052692.jpgYou may have found yourself behind a vehicle sporting a "zero emissions" license plate.  Easy to find.  Look for the smug.  South Park episode 2, season 10:  Smug Alert!.

 

The fact is that while the car may not emit CO2, the power plant that makes the electricity emits more because of the increased load.  There are the batteries too.  How many we gonna need?  Lithium?  Probably something ugly about disposing of that.



But that isn't the point.  It's the giddy, frothy environment in which true-believers will risk real money to buy Tesla's 8 year, NAIC 4 rated bonds.  Like we've maintained, it's a frothy market.

 

BloombergGadfly produced a piece recently wherein the author suggested electric vehicles could potentially tip demand for gasoline into contraction.  Frothy.

 

 

China's Mountain of Debt

 

Leverage, for lack of a better word, is good.  Until it isn't. Chinese officials are trying to rein it in.

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Referring to it as the 'original sin' of China's financial system, leverage has swelled over the past decade -- partly because policy makers were trying to cushion a slowdown in growth from the old normal of 10 percent plus.

 

Wealth management products, non-bank financial institutions, shadow banking, repos and negotiable CDs are among the culprits.

 

Having successfully overseen an explosion in new types of credit, the Chinese are having to pivot into the role of gatekeepers and supervisors -- and to coordinate themselves better as risks pile up.

 

Complete article from Bloomberg.

 

 

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Corporate Yields Lower

NAIC 2 Corporate Bond Yields

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Killing my eyes - make it bigger

Mutual Fund and ETF Flows

Maybe this has something to do with it?

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Killing my eyes - make it bigger!

 

 

 

Client results shown are calculated using SIA standard investment formulae for portfolios AQS has managed in excess of one year.  Each portfolio complies with governing investment statues, regulatory testing standards and metrics.  Results vary based on the client's specified investment policy, risk tolerance, profit objective and product mix.  AQS works with each client to develop a global understanding of objectives for income and surplus growth as well as product opportunities that represent synergies in terms of growth and diversification.

 

 

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AQS Asset Management, LLC, 5806 Mesa Dr., Suite 220, Austin, TX 78731

 

 

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