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It has been instructive, Moini says, to run a junk portfolio in Los Angeles, which he calls "ground zero" of the subprime crisis.
If the coupon yields on a junk portfolio are high enough, they will make up for an occasional loss of principal.
Steven Ruggiero, head of high-yield research at Chase Manhattan's brokerage unit, says most investors should have a junk portfolio invested at least 80% in bonds rated B or higher.
Sooner or later it is almost inevitable that defaults will cut into any junk portfolio's value.
Is anyone in their right mind ready to junk portfolio diversification in money management or CAPM as a tool for companies allocating capital resources?
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Fridson, who manages junk portfolios from the Manhattan office of Fridson Investment Advisors, has sketched out a scenario that has the category delivering a 10.8% total return this year, slightly better than the long-run average return displayed in the chart.
It's possible, but with junk spreads at current levels investors are already being compensated for this risk at a higher level than at any time since 1985 — excepting a very brief period in 1990 when the American Congress forced U.S. institutions to dump their junk portfolios.
Although junk portfolios of the past have weathered economic downturns relatively well, no one can really predict what will happen when the junk class of 1984-1985 meets its first real recession.
Mr. Canale hired Mr. Connolly to run the junk bond portfolio at BNP Paribas in 2001, prosecutors said.
Crédit Lyonnais acquired the junk bond portfolio for about $3 billion, while other French investors acquired the insurance company.
Crédit Lyonnais acquired the junk bond portfolio for about $3 billion, and other French investors acquired the insurance business.
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