Key Fixed Income Portfolio Takeaways’s conference offered several actionable ideas for investors.

Reviewed by: Matt Hougan
Edited by: Matt Hougan hosted its annual Fixed Income conference this month at the beautiful Island Hotel in Newport Beach, California. The event was a huge success, with more than 300 people coming for two days of hard-hitting education, content and networking.

We had a killer speaking lineup, including fixed income luminaries like DoubleLine’s Jeffrey Gundlach, BlackRock’s Rich Rieder and PIMCO’s Mihir Worah.

Here are my six key takeaways from the event:

1. Fixed Income ETFs Are Going to Be Big

This is a little self-serving, but my biggest takeaway was that fixed-income ETFs are going to be big. The sessions were jammed from start to finish, and attendance was up sharply from last year. Our internal target for attendance at the event was 200-300 people, and we beat the high end of that, with 310 registering. The audience was a nice mix of advisors and institutional investors, with a higher skew toward institutions than in years past.

Fixed Income 2015 Audience

That last fact is interesting. Surveys suggest that institutions are moving into the fixed-income ETF market in a major way, and our attendance trends suggest that’s the case.

2. I Want to Buy Closed-End Funds

There, I said it.

Jeffrey Gundlach is a gripping speaker. Never afraid to speak his mind, he delivers piercing insights in an easy-to-understand manner (one of the reasons we’ve also asked him to keynote our Inside ETFs conference in January).

Fixed Income 2015 - Jeffrey Gundlach

His keynote speech in Newport Beach was full of interesting ideas—buy India, sell junk bonds, avoid oil—but the one that stuck with me the most was his recommendation to buy fixed-income closed-end-funds. Gundlach noted that closed-end bond funds are selling at double-digits discounts to their net asset value, and the highest discounts ever, excluding 2008. Meanwhile, many are yielding more than 10 percent.

While I’m genetically predisposed to dislike closed-end funds—I work at, after all—his comments definitely caught my attention. Leveraged yields, decent managers and narrowing discounts can combine to create strong returns in closed-end funds, and this may be lining up as one of those rare moments when it’s time to buy.

3. People Love TIPS for 2016

With inflation humming along at almost zero, owning Treasury inflation-protected securities—or TIPS as they are referred to—is like watching paint dry. But from the opening keynote to almost every panelist throughout the day, presenter after presenter said the same thing: Boring old TIPS may have the most attractive risk/reward ratio of any asset in the market.

Fixed Income 2015: Mihir Worah

TIPS are currently pricing in inflation rates of just over 1 percent for the next 10-plus years. If actual inflation runs higher than that, TIPS will outperform traditional Treasurys. A lot of our panelists—including our opening keynote speaker, Mihir Worah of PIMCO—found that a likely scenario.

4. Demographics Are Important … And Nasty

Our luncheon keynote, Rick Rieder, is another home-run speaker. Rick’s style is to pack about 180 charts into a 50-minute talk. Listening to him is like living inside an all-sensing supercomputer, which is trying to digest and cross-pollinate ideas with data from a million different sources. If you don’t believe me, check out his slides (look on the Day 2 tab, at the 12:10 time slot).

My No. 1 takeaway from Rick’s talk was that Italy, Japan and China are doomed long term, and that U.S.’ future is bright. That had nothing to do with their central bankers or their economies, just demographics. Here’s the chart that stuck with me:

Fixed Income 2015: Rieder population

Working populations are declining in most developed markets, and the decline is precipitous in Japan, Italy and Russia (among others). If you want to know why Japan is in a 30-year bear market, Rick told the crowd, just look at this chart.

Interestingly, Rieder was bullish on both Japan and Europe in the short term, as central bank activity and current valuations are lined up for good short-term returns. But as you look out over the next decade or so, these markets face enormous challenges.

5. Emerging Market Debt Is Starting to Look Tempting

No speaker or panelist at the conference made emerging market debt a focal point of their remarks. There’s something risky about sticking you neck out for an area of the market that can be a disaster. But a handful of folks made positive murmurs about EM debt, and particularly dollar-denominated securities.

Who’s to say no? With yields higher than 5 percent and reasonable duration risk, now might be the time to factor in emerging market exposure to your portfolio. Yes, falling commodity prices are hard on emerging markets; yes, the rising dollar pressures exports; and yes, political risk in emerging markets is rising. But at some point, valuation trumps everything.

6. ETF Liquidity and Trading

The last major takeaway was that investors are really fired up about all the liquidity and trading issues that have made headlines in the past few months. Those who have studied issues like Aug. 24’s market stumble know that the problem lies more with the market structure than with ETFs, but that doesn’t matter one little bit for investors who lost money on that day.

I spoke with a handful of advisors who were caught out in the market downdraft of Aug. 24, and they were furious: with themselves, for not avoiding the problem; at the exchanges, for not canceling trades; and at ETFs, for being involved.

We had packed rooms at our Fixed Income ETF University sessions, where we walked through the basics of how ETFs work and how they trade, but the feedback I got was people wanted to know even more. At some point, firms like—and other folks in the industry—can’t do enough education on ETF trading.


To my mind, the Fixed Income conference was one of the best events we’ve ever put on at The quality of the content was phenomenal, and the questions from the audience were sharp, pointed and insightful. There was a great feeling at the event—we had to keep our Day 1 cocktail reception open longer than expected, as people were having such a good time—and I came away with a handful of ideas one could put to work in a portfolio.

Here at, we’re already gearing up for our next big conference, Inside ETFs 2016. We’ve got a great lineup and 3 1/2 days of content. Register today.

Contact Matt Hougan at [email protected].

Matt Hougan is CEO of Inside ETFs, a division of Informa PLC. He spearheads the world's largest ETF conferences and webinars. Hougan is a three-time member of the Barron's ETF Roundtable and co-author of the CFA Institute’s monograph, "A Comprehensive Guide to Exchange-Trade Funds."