Rosenberg is on the yield bus

Why wait to get paid?

I see in my online DTM (Income still rules amid credit fears) that Gluskin Sheff star economist David Rosenberg is still very much worried about the economy, a concern he has clearly articulated on every CNBC and BNN broadcast that’s he’s been on over the past few months. It just dawned on me that, at its core, his argument favours funds such as ours:

Even as the market lurches forward, the outlook is uncertain and investors are taking on too much risk to be overweight equities

If we’ve learned anything over the past two years, one key point has to be that stable positive returns with lower volatilities are more valuable to investors than the up 14, down 38, up 12 profile that most investors have lived with since 2007. With regular income streams that have the opportunity to adjust in an environment where yields increase, Mr. Rosenberg’s message is the same one our institutional investors have been giving us since we launched our Fund II in early 2004, and again with our Fund III in 2006: give me quarterly cash pay, at a significant premium to risk free bonds, with prudent credit policies that minimize losses, plus the opportunity for meaningful upside should things go very well in the portfolio. Oh, and continue to make money every year, just as you’ve done for the past 10.

Sounds like a perfect fit for an investor with Mr. Rosenberg’s profile.

MRM