Expand your search for cash

Traditional fixed-income products are not getting a lot of love, but experts say alternatives such as corporate and private debt could offer good value

- ANTHONY O’BRIEN

With volatility high across most asset classes at present, it can be worth considering fixed-income alternatives that deliver income without a considerable uplift in risk.

“When we look across the world in fixed income, we are identifying a lot of attractive relative value in investment-grade securities,” says Adam Grotzinger, a senior portfolio manager at Neuberger Berman, an investment management firm.

“And you can achieve upwards of 5% yield pretty easily with a high-quality, straightforward investment-grade portfolio.”

He adds that corporate debt is attractive and believes the “triple B part of that market has some interesting value”: telecommunications, cable media and US banks are three industries that offer good value.

“We also like current production agency mortgages in the US, which are a high-quality liquid asset, backed by the full faith and credit of the US government,” he says.

Dania Zinurova, the portfolio manager for WAM Alternative Assets, says there are numerous fixed-income alternatives available to investors, and they can provide strong, risk-adjusted yields with low volatility within the alternative assets space.

She believes these investments can provide a powerful alternative to conventional fixed income. “Valuations on alternatives are done less frequently compared to more traditional asset classes, and so more wholly reflect long-term underlying fundamentals as opposed to short-term market volatility.”