Top Picks: The Perpetual Hunt for Yield

“The hunt for yield is a perpetual decision point for all financial advisors,” Matt Collins, Head of ETFs at PGIM Investments, tells Asset TV in a recent interview.?

Here’s more on what Collins calls a timeless decision point for financial advisors.??

“The way we look at it is whether rates are at 0 or 5%, it's the same behavior. Everyone is looking for an incremental yield over cash. And they wanna do it in a very risk averse way. And I think if you look at interest rates, anything above 2%, 2.5%, absolutely changes sort of the fundamental makeup of a portfolio, right, as you look for yield. But whether it's at 5 or 0, they're still looking for safety and about 50 basis points or so over that money market yield. And that's a timeless decision point for an FA.”

Next, Mohit Mittal, CIO Core Strategies at PIMCO , outlines opportunities for active adjustments in the fixed income space.?

“There are plenty of areas that we see opportunities for active adjustments in the portfolio to take advantage of many of the dislocations. In the corporate credit space, what we have seen is that liquidity premium has come down. What we have done in the portfolio is reduce our allocation to credit, replace it with higher quality spread products like agency mortgages, like structured products. And that limits the downside in the portfolio during periods of volatility. More recently what we have seen is a pretty significant repricing in the US interest rates. Following that repricing, we have meaningfully increased the duration risk in the portfolio. We have gone from about a half a year underweight six months ago to now almost 0.75 years overweight on the duration space.”

Finally, Greg Gizzi, Head of U.S. Fixed Income and Head of Municipal Bonds at Macquarie Asset Management , explains why he says bonds are so attractive right now.?

“If you look at across fixed income where all in yields are, they are at or near the highs, of where they've been over that 15 year time period. Right. So we're talking about a very, very attractive proposition for investors. As we look at this year in 25, rates are going to peak sometime in the in this first or second quarter and then gradually grind lower to levels that will finish the year below where we started. So while we're looking for some price appreciation for us, the real opportunity in 25 is going to be, with managers that focus on income. Income will be the component in total return that will drive, overall total return this year. So we really recommend, people focus on the lower investment grade or?below investment grade tiers in the muni space.”