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Loomis Sayles Bond Fund Co-Portfolio Manager Kathleen Gaffney argues investors should consider corporate bonds with European exposure for their portfo...
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-- collection clarity finally but we still have investors financially fleeing the entire region.
But as they kick their Fiat and Peugeot as -- the fourth gear and got it away from Europe we found a fund manager who warns that if you wait until the crisis is resolved.
There won't be any opportunities left in Europe Kathleen Gaffney is here to tell you where -- -- what -- she's co manager of the 21 billion dollar Loomis Sayles bond retail -- She's here.
And a Fox Business exclusive you Steve together it -- stave -- -- Mike gosh you're saying Gulfport Gulfport but.
You take up a very interesting -- you go for corporate bonds right now -- have European exposure that are bought in different currencies other than the US dollar.
Most of the corporates are actually in the US dollar.
But for example your first pick is not.
-- yes that's a convertible bond so US company.
What we like about in talent owning a convert is that eventually and you may find this hard to believe interest rates will be going up.
So what kind of -- -- want to own if interest rates are rising most funds go down.
We think Intel because of their global market share is going to do well and that's to take a -- that can go up.
OK now your fine and Intel.
Convertible or corporate -- -- convertible OK so we're showing the corporate -- here but the convertible what are some maturity and the in the -- for action it's.
-- yield right now is.
Just around 3%.
So in line with the equity.
But on a fixed income and so that we -- -- get that equity -- and do it through.
A vehicle it still fixed income by the way she -- -- in Australian dollars in the Aussie dollar so -- -- you get the different exposure there.
Yes with GE that's -- yes so let's talk about -- How you do it and what it is it your -- -- do not buy the stock.
No -- by the corporate bond payable in Aussie dollar and the reason being if you look at investment grade credit here in the US.
Okay yields but what I think about total return and again thinking that eventually rates are gonna rise.
That the returns there don't look all that appetizing.
But table in the Aussie dollar you're gonna get additional yield so -- higher yield than buying a bond here in the US.
Plus you get currency appreciation the Australian dollar is tied to growth coming out of Asia particularly China so that bonds got a lot more going for.
What's -- thing is I asked coupling so.
How do I do that with my own money she set by the fund simply put I don't -- -- sales but if you wanna get the -- exposure to the GE.
Corporate correct talk about what debt of what's of what suffered -- -- -- buying right now as well.
In the -- area we have seen some opportunities.
In Europe Ireland is our our biggest tech.
Not because my last name is Gaffney.
-- but we think that there's real growth potential.
In Ireland and that's the key there's a debt crisis in Europe C want -- look at what's the sustainable level of debt.
And do they have growth potential Ireland does they've got an educated workforce they've got great manufacturing capacity.
And their corporate tax rates pretty attractive so that's money that those -- there's a characteristic that will attract foreign money.
You have the police in essence that.
Companies are going to pay their debts so you want then by those corporate bonds because they will come through with -- They will in fact a lot of corporate that we're looking at.
They are invested all around the globe so they're not tied specifically to.
To Europe to their domestic economy they've invested in Latin America.
So that's me cash flow that strong that's the rating agencies are looking at their able to hold onto their investment grade ratings even though the sovereign may be under pressure into.
Way as you head directly into oncoming traffic has everybody's fleeing the region.
Your belief that this European zone crisis is really something that would be a crisis it's a terrible thing to waste but there -- fear.
You're not scared so how do you capitalize upon.
By scouring the markets for those opportunities.
That when it looks the most -- certain.
Think long term and and what we see there is Europe it's not America so -- -- very differently.
They are going to take their time getting there but they've been successful in the past and there are economic reasons.
And political reasons think about it the global stage changes if it's seventeen.
Small countries they will lose their relevancy in the global theater.
One last question because it is a trait that we've seen over and over again for the past half the year to year.
People flooding US treasuries particularly the ten year when the field is so pathetic one point 58%.
What do you say to people who are doing that -- Kathleen I feel so safe my money's in US treasuries.
Return -- any risk run from it.
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