- High-yield fund boosts investment-grade holdings to record
- Flood of cash chasing yields has pushed up junk-bond prices
Goldman Sachs Group Inc. has shifted money to the sidelines of the municipal junk-bond market, waiting for it to crack.
The company’s $7.3 billion High Yield Municipal Fund, the third biggest focused on the riskiest state and local government debt, had about 62 percent of its assets in investment-grade securities by the end of April. It marks the fund’s biggest move ever away from the lowest-rated bonds and a wager that the run-up in prices will reverse as speculative projects start to run into distress, said Ben Barber, head of municipal bonds at Goldman Sachs’s asset management arm, which oversees $62 billion of the securities.
“What we’re hoping for is there’s a new round of opportunities in the muni market over the course of 2019 or 2020,” he said in an interview. Goldman’s high-yield muni fund beat more than 90 percent of its peers over the last five years.
Bloomberg Markets
By Amanda Albright
May 16, 2019, 10:34 AM PDT