June 18, 2018 | by Isaac Braley, President, Director, Co-Portfolio Manager, BTS Asset Management, Inc.

BTS Presents at CFA Society of New York’s 28th Annual High Yield Bond Conference

Together with BTS co-portfolio manager Matthew Pasts, I had the honor of presenting at last week’s annual High Yield Bond Conference convened by the CFA Society of New York.

Event chair Martin Fridson, CFA, Chief Investment Officer, Lehmann Livian Fridson Advisors LLC, invited us to present on technical analysis of high yield bonds—a topic that Martin said hadn’t been previously covered in the 28 years the CFA Society of New York has held this event.

We were pleased to share perspectives drawn from BTS’ decades of experience applying a technical approach to trading in the high yield sector. For example, we talked about model development with the practitioners in attendance. As we shared at the event, we see the following four points as critical when developing a model to guide trading:

• Focus on no one single indicator
• Create proper weighting of indicators
• Create desired trade frequency
• Focus on preservation of capital approaches

We also described the specific framework by which we analyze price data on our way to investment decisions. The following graphic reflects how price data, by its nature, incorporates a wide range of market influences. Our proprietary models focus on price because we’ve seen its impact for decades.

In the graphic shown above, one of the descriptors for “BTS Market Analysis” is “Trend/Momentum.” As we shared with high yield investment practitioners, our indicators are structured with a focus on these two categories (and are complemented by other inputs). At BTS we consider a combined Trend/Momentum reading of over 50% to indicate a positive intermediate-term trend, as described by the following graphic:

A final example pulled from our conversation with high yield practitioners highlights key points in our investment decision-making process—that is, how we apply the models themselves:

We were honored to participate in this outstanding event convened by the CFA Society of New York. If you would like to learn more about the BTS investment approach highlighted here, we invite you to be in touch.

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It should not be assumed that investment decisions made in the future will be profitable or guard against losses, as no particular strategy can guarantee future results or entirely protect against loss of principal. There is no guarantee that the strategies discussed will succeed in all market conditions or are appropriate for every investor.