Investment opportunities in an indebted world

'Three-letter debt instruments' attractive diversifiers

In the aftermath of the Global Financial Crisis, investors appeared to avoid anything that was identified by letters rather than proper words, such as CDO, ABS, RBS, and so on.

It was understandable. Headlines screamed about three-letter debt instruments packaged up by banks that often contained worthless securities - and their holders had no idea until they went "pop". Against this backdrop, we saw many institutional investors turn to bonds issued by blue-chip companies that, although yielding less than their portfolios would like, were easily identified, explained and measured against competitors.  The blue chips, for their part, were only too happy to oblige - dramatic cuts to interest rates meant they could issue bonds at record low levels.  Is anothe...