00:00Fixed income has had a great year. Where do you put the incremental dollar, though, when your client wants to invest more money?
00:06What are you buying right now? Within fixed income or overall? Well, within fixed income. Within fixed income.
00:11So we still we still like higher grade credit. So we still like investment grade. We've seen spreads tighten across the board.
00:17We think they've tightened probably a bit too much in high yield. In investment grade, they've certainly tightened.
00:22But we're still we're still OK with the all in yield. We're broadly still OK, which is earning carry.
00:27We don't see spreads tightening much further. But we think the all in yield is OK. We also like corporate hybrids.
00:32It's a much bigger market in Europe, more deeper, more liquid, more issuers. We see that market growing in the U.S.
00:38And so you're getting you're getting extended credit like returns from investment grade issuers.
00:43And you're just moving out the capital structure instead of moving out the restructure. So we have been more focused for going into next year on on hybrids as well.
00:50Mike, what do you what do you do with new money right now? Where do you put it in fixed income?
00:54Well, it wouldn't be a fun show if I if I only agreed with Alex.
00:59So I would take the exact opposite view on investment grade corporate credit.
01:04From my perspective, I'm not I'm not sure what the upside to owning credit risk is here when you can own,
01:10you know, munis or agency mortgage backed securities with similar, if not better, yield with a government guarantee,
01:17with the backing of tax receipts and more spread tightening potential relative to historic lows in mortgages, say,
01:26than investment grade corporates. So, you know, the path to hell is paved with carry.
01:30Don't like carry trades. And so for us, it's it's mortgages and munis here.
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