High yield bond mutual funds are gaining importance these days due to their ability to offer attractive returns and strong diversification benefits. The investment case is also supported by the fact that many investors have suffered huge losses by direct stock investing while these mutual funds have generated equity-like returns with relatively lower volatility. Although, the name suggests that it primarily invests in bonds rated below investment grade (aka junk bonds), the portfolio risk is minimized because these funds hold a wide range of such securities. Moreover, high yield mutual funds provide better returns than most other conventional bond mutual funds. One other important investment consideration is the lower susceptibility of these funds to interest rate fluctuations compared to investment grade securities, as the former has higher yields compared to the latter. Simply put, prices of high yield bond funds tend to be more sensitive to changes in their issuers' financial outlooks than to changes in interest rates and therefore can act as a natural hedge against interest rate risk. Generally, high yield bond mutual fund offers returns equivalent to direct stock investment. These mutual funds are managed by experienced fund managers who have a vast experience in the capital markets. If mutual fund investments are done for a longer term basis, one can get exceptional returns, far more than what can be obtained by just keeping money in the bank. Investors can invest in a variety of high yield bond funds that are available in the market. Some of the common themes of investments include - 1) high risk - high - return 2) low risk - low return, and 3) the medium risk - medium return. Interestingly, even low risk - low return funds have potential to general substantial return on investments. On the other hand, the main disadvantage of these investments is that lower interest rates do not always result in higher prices of the HY bonds. Basic steps to follow Although, investing in high yield bond mutual funds is not very common with individual investors, the steps that need to be followed while investing do not differ much compared to the traditional mutual fund investing. Investors need to go to the office of the mutual fund provider and meet with investment managers. The manager typically explains the advantages and disadvantages of every fund. Investors and managers can finalize the investment policy statement as per risk appetite and return objectives on investors. The final stage is security selection. Investors can select a few funds and invest in a fund, which has a good reputation in the market and has given consistent returns to investors over a time. One important consideration for investors is to remember that these investments are affected by market risks. It is a common phenomenon that investors may see volatility in the investment value and might see negative returns on their investments in the near term. That said, as market conditions improve, these funds rise in value notably. As an active fixed income underwriter, C.L. King co-manages the issuance of investment grade bonds, high yield bonds and $25 par value retail bonds and preferred. Our peer-leading capital base, proven fixed income sales and trading platform, and long-standing distribution capabilities into retail broker-dealers and mid-tier bond investors allows us to handle large underwriting commitments. For more details, please visit us here: http://www.clking.com/
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19th Century - Civil War Investment banking has been around since the start of the 19th century. To put that in perspective, Napoleon was still winning wars, and Ohio just became the 17th state. Private banks were offering investment-banking functions during this time and up until the Civil War. In the 1860's, Jay Cooke started the largest securities selling operation the United States had ever seen. He amassed more than $1.5 billion dollars in war bonds for the U.S. treasury, supplying much needed capital to the Union Army. Post-War The period after the Civil War was tumultuous for the financial market. In older established countries such as Great Britain, capital could be sourced from a vast number of international banks. The United States, on the other hand, was growing rapidly but had no such resources. Investment banks emerged to connect investors with capital and firms who needed that capital during the time of western expansion. Large amounts of capital were needed to fund heavy industry, mining companies, and railroads, such as the Union Pacific and the Central Pacific. The Great Depression Skipping ahead to the 1930's, The Great Depression had taken hold of the nation, and President Roosevelt was in office. The banking system in the United States had collapsed and all functions had ceased. Roosevelt had constructed the New Deal, a series of laws and executive orders designed to provide relief, recovery, and reform to the ravaged U.S. A huge portion of the New Deal was concerned with the banking system. The Glass-Steagall Act of 1933 formally separated banks by function, either commercial or investment banks. Unlike traditional commercial banks, they could no longer accept deposits or issue notes. They would serve as intermediaries or brokers. Post Depression- Present After the era of the New Deal, investment banks shifted their focus to advising on mergers and acquisitions and public offerings of securities, such as stocks. The Glass-Steagall Act of 1933 was repealed in 1999 and removed the separation between investment and deposit banking. This move directly contributed to the financial crisis of 2007. This is sometimes called the Great Recession or the Global Financial Crisis. It was the worst financial disaster since the Great Depression. There is currently reform and change going on regarding the banking system. Regardless of the banking highs and lows, investment banking changed the American landscape. It turned the tides of the Civil War, and Western expansion would have been deterred without it. It facilitates capitalism in America and is a pillar of modern banking. Lending money and making money - it's all a part of the American dream. C.L. King & Associates is a full-service investment bank and self-clearing broker-dealer founded in 1972. We provide investment banking, equity research, sales and trading, and investor services to corporations and institutions. Since our founding in 1972, CL King has evolved from an equity boutique to a full-service investment bank. Our focus on debt and equity capital markets remains the core of our robust platform supported by a well-respected research, sales, trading and clearing operation. To learn more about how C.L. King & Associates ’s capabilities align with your long-term goals, please contact us at 212.364.1830 Also read: Investor Relations Services Benefits and What They Can Do For You |
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