AWTM Newsletter

John E. Kaprich

John E. Kaprich
As investment director, Mr. Kaprich is responsible for overseeing market strategy, portfolio construction, and risk management for Aware Asset Management. He currently oversees the Core Bond strategy. With over 20 years of investment experience, he has held multiple portfolio management positions, including Chief Investment Officer, prior to joining the organization in 2011. He received his bachelor’s degree in finance and his Master of Business Administration degrees from the University of Iowa. He is a CFA charterholder.
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Recent Posts

Congress Needs To Keep Spending Money

Posted by John E. Kaprich on Aug 26, 2020 11:29:58 AM

  • COVID-19 continues to have profound effects on the U.S. economy.

  • Without material improvement in the labor market, the economy will continue to require
    aggressive monetary and fiscal stimulus.

  • With economic demand still weak, unless the U.S. Congress pushes through an aggressive
    policy of fiscal stimulus, the U.S. could suffer an economic catastrophe.
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It's Not The Fed's Job to Boost Asset Prices

Posted by John E. Kaprich on Jun 25, 2020 2:10:17 PM

  • The Federal Reserve has succeeded in stopping the liquidity crisis that gripped markets.
  • Flooding the markets with liquidity has led to an asset bubble that benefits the rich and widens the wealth gap.
  • It's not the Fed's job to prevent investor losses and prop up zombie companies, this creates a new set of problems that could lead to economic catastrophe.
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Corporates Look More Attractive Than They Have in 11 Years

Posted by John E. Kaprich on Apr 15, 2020 7:03:08 PM

A lot of the material being written about the fixed-income market's correction examines which companies will see their bonds downgraded and the possible effect this will have. But, we think the big story is that the corporate credit market looks more attractive than it has in 11 years.

As we sit home amid the Covid-19 Pandemic, the outlook is scary because we have no idea how long the economy will be affected. The closest comparison we have is the Spanish Flu of 1918, a disease that spread rapidly and killed millions. Since the markets back then were not as developed as today, the past offers little guidance on what to expect. And this uncertainty is spooking markets.

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The Bond Market is Addicted to Low Rates

Posted by John E. Kaprich on Feb 3, 2020 7:31:44 PM

I don’t know if the market is just damned drunk on low interest rates or hung over. But, it still hasn't come to grips with: “Why keep interest rates so low when it doesn’t seem to affect growth or inflation?"

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Topics: Investment Strategy

No Recession in 2020; Support Your Risky Assets

Posted by John E. Kaprich on Dec 30, 2019 8:00:00 AM

Predicting the future is a hazardous occupation. No one correctly predicted that the 10-year U.S. Treasury's yield would spike to 3.25% in late 2018, before falling to 1.45% in less than a year. But that's what fixed-income money managers do. We seek to invest for the future by navigating through rugged environments.

Unlike December 2018, when the Federal Reserve was still raising interest rates, Fed tightening is no longer a concern. After three cuts in the Federal Funds Rate over the last six months, concern over what we believe is faulty monetary policy has disappeared.

So as another year ends, and people look to rebalance their portfolios, we offer our outlook for 2020.

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Topics: Investment Strategy

Treasurys Are Not Risk Free

Posted by John E. Kaprich on Nov 8, 2019 10:44:06 AM

The foundation of the U.S. bond market, and the global market in general, is that bonds are less risky than stocks and that U.S. Treasury securities (bills, notes, and bonds) are "risk free."

But the times they are a changing and Treasurys may not be as, "risk free" as people think.

U.S. Treasurys are considered "risk free," because these fixed income instruments don't have any material credit risk; they’re backed by the full faith and credit of the U.S. government. Unlike a corporation, which can go bankrupt and default on its bonds, there's virtually no risk of the U.S. government not paying the principal and interest on its debt.

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Topics: Investment Strategy

Don't Focus on the Noise - The Fed will Stand Pat on Rates in June

Posted by John E. Kaprich on Jun 14, 2019 4:00:00 PM

If you're following the headlines about President Trump's trade dispute with China, and the back-and-forth with Iran, it's easy to get caught up in punditry and assume the worst, which is what bond investors do best. They assume the worst. And because of that, the bond market is expecting a couple of interest rate cuts by the Federal Reserve Open Market Committee (FOMC), the Federal Reserve's policy board, soon.

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Topics: Investment Strategy

Don't Fear the Yield Curve

Posted by John E. Kaprich on Apr 17, 2019 8:55:00 AM

I'm John Kaprich, Investment Director at Aware Asset Management; a firm focused on active fixed income management through a broad suite of fixed income products. One such product is the Aware Ultra-Short Duration Enhanced Income ETF (ticker: AWTM), an actively-managed fixed income ETF designed for investors looking for cash-plus solutions.

I’d like to welcome you to the inauguration of a new column discussing topics relevant to the bond market.

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Topics: Yield Curve, Investment Strategy

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