Beyond Sovereign Bonds
November 3, 2023
Monthly commentariesBeyond Sovereign Bonds
A higher-yielding, risk-conscious strategy fortoday’s market and economic landscape.
Building on our publication from March 2023, entitled “Higher Yields Are Bringing Investors Back to Fixed Income,” this paper examines several asset classes that offer additional yield over sovereign bonds: investment grade (IG) and highyield (HY) corporate bonds, preferred shares, and emerging market (EM) corporate bonds.
Importantly, we situate our discussion in the context of the current economic cycle to determine how investors can best orient their exposure tothese instruments, recognizing that each person’s decision will be based on their own risk tolerance and financial circumstances.
In our view, it is prudent for investors to improve credit quality in their portfolios given currently high sovereign yields, fairly tight credit spreads and our belief that slowing economic conditions will further weigh on corporate profitability and hence credit profiles going forward.
