Fixed Income Market Performance Summary - Q2 2020

Banking executive Colin Robertson is the executive vice president of Northern Trust in Chicago, Illinois. From his Chicago office, Colin Robertson manages all the firm’s fixed income investments, evaluating market performances every quarter to inform investment decisions.

The last market quarter (Q2 of 2020) was particularly better for investors than Q1 as asset classes posted a recovery from their previous declines. While overall the returns for most equity markets were down year-to-date, US growth and technology stocks moved toward positive territory. The gains were propelled by easing of lockdown measures, loose monetary policy by the Federal Reserve, and a reduction in weekly claims for unemployment insurance.

In the fixed income market, US 10-year yields saw little change, staying near record lows and channeling the effects of weak economic activity and quantitative easing measures. Fixed income assets more sensitive to risk, however, saw their yields decline.

Corporate bonds performed strongly in the quarter, far outpacing their government counterparts. High yield bonds that were more speculative returned 11 percent while investment-grade bonds returned 7.9 percent. Overall, US energy companies performed well across both.

About the ABA Foundation's Safe Banking for Seniors Program

A Chicago-based banking executive, Colin Robertson has in-depth experience in the financial services industry spanning more than three decades. In addition to serving as an executive vice president at Northern Trust in Chicago, Colin Robertson maintains membership with the American Bankers Association (ABA) where he is part of the Investment Advisory Committee.

The American Bankers Association supports America’s banks as they perform their role of strengthening the economic and financial landscape as well as assisting communities to thrive. The association consists of banks of various sizes and shares the latest industry news. ABA runs some of its programs using the ABA Foundation which provides free resources and programs to assist bankers to improve the well-being of both their customers and the entire community.

Sponsored by the ABA Foundation, Safe Banking for Seniors (SBFS) is a free national program that provides bankers with the required tools and resources to offer assistance to seniors, their families, and caregivers. The program offers bankers access to presentations, resource sheets, activity sheets, and guides to enable bankers to connect with their local communities. Bankers can use this training to advise on how to choose a financial caregiver, identify and avoid scams, prevent identity theft, and become a responsible financial caregiver.

Fixed Income Securities in Goals-Driven Wealth Management

Banking executive Colin Robertson is an executive vice president at Northern Trust in Chicago. From his office in Chicago, Colin Robertson oversees the firm’s fixed income investments.

Fixed income investments are usually low risk and include quality fixed income securities and cash.

They have an unassailable role in goal-oriented wealth management, which is to meet near-term goals such as medium-sized purchases. They are different from higher risk assets like global equities and high yield bonds. These are also included in wealth management, but are used to fund longer term goals because of the higher return premium on equities.

However, while fixed income investments are low risk, that does not mean they are risk free. Risks that could undermine their performance are inflation, default by issuing institutions, rising real interest rates, taxation, and lack of liquidity. Because principal amounts are used primarily to meet near term needs, it is absolutely crucial to protect them from these risks, offering a positive return even in distressed economic times and despite taxes and inflation.

Ultimately, no single fixed income asset can achieve this on its own. That’s why a mix of fixed income assets is appropriate. A good mix usually includes inflation-protected treasuries, liquid securities, tax-efficient bonds, and low duration investment grade bonds, to mitigate real interest rate risk. The risk of default is kept to a minimum by selective preference for assets with high credit quality.

American Bankers Association Advocacy Goals

A Chicago-based banking executive, Colin Robertson has spent the last two decades of his career in the Chicago offices of Northern Trust. In addition to his work at Northern Trust, he stays apprised of new developments in the banking industry through membership in organizations such as the American Bankers Association. Colin Robertson also serves on the organization’s advisory board.

The American Bankers Association advocates on behalf of the banking industry to Congress as well as state legislative bodies, seeking to ease the regulatory burden on financial institutions and improve the ability of the industry to serve customers. The association also serves banks as they adapt to new rules, such as recent changes to the American tax code.

Some areas of advocacy include:

- the reduction of overall regulation, and the targeting of remaining regulation to better suit the charter, scope, and geography of individual banks and their service areas
- stricter liability rules for non-banking organizations subject to data breaches
- the end of the credit union tax exemption
- a reconsideration of the Farm Credit System
By pursuing these policy goals, the American Bankers Association hopes to change banking for the better for all stakeholders.

Northern Trust Promotes Socially Responsible Investment

Based in Chicago, banking executive Colin Robertson serves as the managing director of fixed income for Northern Trust. In the Chicago office, Colin Robertson oversees some 68 employees. 

Out of respect for the global community, Northern Trust encourages socially responsible investing (SRI). For over 25 years, the firm has emphasized environmental, social, and governance (ESG) factors when it creates stock portfolios. 

It pursues these goals by vetting companies for their adherence to ESG principles, following strategies that produce socially beneficial returns, and selecting from indexes such as the Domini 400. Northern Trust also supports shareholder voting to change corporate priorities. 

The bank screens out investments in a wide range of categories, from tobacco and pornography to discrimination and arms-dealing. It also turns down industry sectors such as gambling, firearms, and nuclear power. 

Instead, Northern Trust looks for choices that benefit society, such as clean energy, human rights, product safety, and diversity on boards of directors. Desirable companies tend to be innovative, quality-oriented, and maintain good community and employee relations. 

Northern Trust also chooses companies with some good environmental practices that may be otherwise screened out, such as extractive industries. This best-of-sector approach encourages businesses to upgrade their environmental and governance performance.

American Bankers Association Hosts 2017 Conference in Chicago

A graduate of Northwestern University’s MBA program, Colin Robertson serves as executive vice president of Northern Trust, located in Chicago, Illinois. A professional in the Chicago area for more than two decades, banking executive Colin Robertson serves as a board member for the American Bankers Association(ABA) investment advisory committee.

Representing America’s bankers, the ABA offers training, information, and resources for its members. It represents more than two million banking professionals, who work for institutions that hold almost $17 trillion in assets and safeguard nearly $13 trillion in deposits.

Every year the ABA sponsors a national conference where members gather, network, and learn about changes within the banking industry. The 2017 annual conference is scheduled for October 15-17 at the Hyatt Regency Chicago. This event includes general sessions that focus on political and economic trends and forums that feature moderators who are experts in banking. Featured speakers include Tom Ricketts, executive chairman of the Chicago Cubs; General Michael Hayden, former director of the Central Intelligence Agency and National Security Agency; and Marcus Lemonis, host of CNBC’s “The Profit” as well as CEO and chairman of Good Sam Enterprises and Camping World.

Where Will Interest Rates Go in 2017-2018?

Colin Robertson serves as managing director of fixed income investments for Chicago’s Northern Trust Asset Management. The banking executive’s major responsibility is overseeing the department handling bonds and other fixed-income instruments. Also in close contact with his Chicago clients and internal partners, Colin Robertson continues to keep a close eye on economic forecasts.

One Forbes commentator projected the future of interest rates for 2017-2018. He predicts no rate hikes in 2017, doubting the Federal Reserve’s prediction of two more increases before the end of the year. 

The observer maintains that the Fed is inaccurately predicting the pace of continued economic expansion. He notes that discretionary spending by business is still down. Reflecting this shortfall are problems in hiring, new building construction, and buying more equipment and IT systems. These weak performances mirror uncertainty about the economy. 

Foreign and economic policy remain unclear, affecting export-import activity and the transport and warehousing sectors. Still-evolving immigration rules may impact construction, agriculture, and the hospitality industry.

Doctors and physicians have also expressed concern for the national healthcare system, and changes in governmental policies are likely to influence the banking industry, education, and utilities to an unknown degree. 

However, next year economic uncertainty should ease, leading to a more robust strengthening. 2018 should bring about more rate increases from the Fed.