Highland’s Okada Sees a Renewed Search for Yield
Mark Okada, CIO and co-founder of Highland Capital Management, said in a third-quarter commentary that investor uncertainty will fall post-election and the firm is positioning its portfolios to benefit from a renewed search for yield in higher-quality credit. “Amid the negative aspects of this election, one positive it brings is relief from high investor uncertainty. And it doesn’t matter who gets elected; the mere fact that we know the next president is enough to materially reduce uncertainty,” he said in the commentary, released this month. “When that happens, the cash-heavy investors who have been waiting for clarity will begin to look for ways to put capital to work for 2017.” Okada said that a Hillary Clinton victory increases the chances of a Federal Reserve rate hike in December, while a Donald Trump win raises the risk of a recession in 2017. “Considering those scenarios, loans appear well-positioned either way,” he said. Given the downside risks that both candidates present, including the “mounting unintended consequences” of regulation under Clinton and the perceived threat of a trade war under Trump, and the overall global macro picture, Okada said high-quality credit is an “attractive destination for capital.”
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