Chief Investment Officer and Baird Funds President Mary Ellen Stanek and Deputy CIO Warren Pierson are quoted in a July 13 New York Times article titled “How It Got Riskier to Own High-Quality Corporate Bonds.” Following is an excerpt:
… the corporate bond market is not yet pricing in a possible recession. “We are later in the game, but the innings are longer,” said Mary Ellen Stanek, chief investment officer of Baird Advisors, and co-manager of Baird’s suite of bond funds. “We are now in the second-longest post-World War II economic cycle, with no end in sight.”
… Companies may have learned from their experience in the last financial crisis. “One of the things that came out of the crisis was treasurers realizing they had too much exposure to short-term debt,” said Warren Pierson, a co-manager of the Baird bond funds. The $1.1 trillion that exists in short-term commercial paper today is half the amount in 2007.
It’s actually pretty smart that they have issued a lot of long-term debt at very low interest rates,” Mr. Pierson said. “I am not saying they are completely insulated from rising interest rates, but it has been good financial management.”
Investors should consider the investment objectives, risks, charges and expenses of each fund carefully before investing. This and other information is found in the prospectus and summary prospectus. For a prospectus or summary prospectus, contact Baird directly at 866-442-2473 or contact your Financial Advisor.
Some of the potential risks associated with fixed income investments include call risk, reinvestment risk, default risk and inflation risk. Additionally, it is important that an investor is familiar with the inverse relationship between a bond’s price and its yield. Bond prices will fall as interest rates rise and vice versa. High yield securities may be subject to heightened market, interest rate or credit risk and should not be purchased solely because of the stated yield. Ratings are measured on a scale that ranges from AAA or Aaa (highest) to D or C (lowest). Investment grade investments are those rated from highest down to BBB- or Baa3. Past performance does not guarantee future results.