3 Financial Stocks Built For Higher Bond Yields

Long term interest rates are climbing, government debt piles are growing and bond markets are demanding higher compensation for risk. That mix is reshaping how capital flows through broker dealers and fixed income asset managers. For investors, it can reward firms that handle bond issuance, trading and debt focused products well. This article examines three stocks from our fixed income screener that appear positioned to benefit from these shifts.

The stocks covered below are just a sample, and the full screen surfaced 22 more publicly listed fixed income asset managers and brokers with equally compelling stories that are not included here. To identify and analyze the full opportunity set, head straight to the Publicly Listed Fixed-Income Asset Managers and Brokers screener.

MarketAxess Holdings (MKTX)

Overview: MarketAxess Holdings runs an electronic trading platform that connects institutional investors and broker dealers to trade a wide range of bonds, from U.S. corporate and government debt to emerging market and municipal securities. This ties it directly to trends in global fixed income issuance and secondary trading.

Operations: MarketAxess generates about US$870 million of revenue from its end to end trading solutions, with roughly US$568 million coming from the United States, US$191 million from the United Kingdom and US$110 million from other markets.

Market Cap: US$5.7b

Rising long term interest rates and heavier government and corporate bond issuance make MarketAxess worth a close look if you care about how fixed income trading is changing. The company is a key electronic venue for corporate and government bond trading, benefits directly when volumes pick up, and has high margins and strong returns on equity that suggest its platform model scales well. At the same time, competition from other electronic venues and the risk that large block trades stay on the phone rather than move on screen could limit growth in its most lucrative areas. Add in the pending Intercontinental Exchange takeover and it becomes a bond market gateway whose future path is being actively reshaped.

MarketAxess is often viewed as a pure play on the migration of bond trading onto electronic platforms, yet many investors still focus on volumes alone. To understand how its model, margins and competitive pressures fit together, start with the analysis report for MarketAxess Holdings

Acadian Asset Management (AAMI)

Overview: Acadian Asset Management is a Boston based asset management holding company that runs equity, fixed income and alternative investment strategies for both individuals and institutions, giving investors access to diversified, professionally managed portfolios tied directly to global capital markets.

Operations: Acadian Asset Management generates about US$654 million of revenue from its Quant & Solutions segment, after adjusting for roughly US$14 million of revenue excluded from consolidated funds, with around US$458 million coming from the United States and US$161 million from other regions.

Market Cap: US$3.2b

Higher long term interest rates and heavier bond issuance intersect neatly with Acadian Asset Management, which runs systematic equity and fixed income strategies that aim to produce yield with risk controls and low correlation to broad markets. Recent revenue and earnings figures, plus continued buybacks and a steady dividend, indicate a business that is scaling its platform while still returning cash to shareholders. At the same time, high leverage, debt that is not well supported by operating cash flow, and a history of weaker multi year earnings trends mean investors may want to look closely at balance sheet resilience if bond markets become stressed. The main question for investors is whether Acadian’s quantitative engine can justify its valuation as higher yields reshape fixed income investing.

Acadian Asset Management’s systematic engine and steady shareholder returns can look compelling, yet its leverage and cash flow coverage raise sharp questions. Get the full picture in the 2 key rewards and 4 important warning signs (3 are major!)

Lazard (LAZ)

Overview: Lazard is a global financial advisory and asset management company that helps governments, corporations and investors with deals, debt and portfolio management, including fixed income strategies that tie directly into bond markets. Its cross border advisory work and fixed income funds give Lazard multiple ways to earn fees when clients issue, restructure or invest in debt.

Operations: Lazard generates about US$1.78b of revenue from Financial Advisory and US$1.45b from Asset Management, with a small loss reported in its Corporate segment.

Market Cap: US$4.19b

Rising long term interest rates, heavier government borrowing and wider credit spreads are creating more demand for Lazard’s debt advisory, restructuring and liability management work, while its fixed income asset management and income focused funds stay closely tied to bond markets. At the same time, the company relies on external funding, carries meaningful debt and pays a dividend that is not well covered by current earnings. This raises questions about how resilient that payout is if markets stay volatile. For investors who want exposure to bond related fees and a global advisory franchise, the tension between those opportunities and balance sheet and earnings risks is a central feature of the Lazard story.

Lazard’s fee engine could be quietly rebuilding momentum while debt risks keep investors cautious. Get the full story in the 3 key rewards and 3 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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