Finding opportunities as income investors
- The events of 2020 have altered the economic, policy and investing landscape more profoundly than any other short period of modern history. We now see the economic recovery gaining pace and expect a robust expansion into 2021. This view is justified by the trajectory of macro data and our expectation that support from policymakers through both fiscal and monetary stimulus will remain in place. We’re in the early days of a new economic cycle and this should be a positive environment for risk assets.
- The implications of this year’s events on income investors can’t be understated. While the income and safety attributes of traditional bonds have historically been attractive, a paradigm shift is needed when trying to seek income and capital appreciation today. We believe investors will be best served by employing a flexible, multi-asset approach.
- In the following pages we present our analysis, which draws on three key observations:
- Traditional fixed income is challenged
- Policymakers are supporting risk assets and guiding toward a prolonged period of low rates
- Dividend-oriented equities offer compelling valuations