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.”
This story is from the September 2022 edition of Money Magazine Australia.
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This story is from the September 2022 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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