In our view, there are three paths which could offer potential returns to investors, while endeavouring to avoid assets with low yields and possibly negative returns.
- adding to higher yielding bond strategies given that such strategies can offer attractive yield pick-up relative to developed world government bonds
- within equities, a focus on unconstrained strategies capable of generating returns in differing environments due to more active and flexible investment approaches
- increasing exposure to alternative asset classes, such as hedge funds, real estate, and infrastructure, which can help to improve the overall risk-adjusted return potential of investors’ portfolios
In summary, the low yield backdrop certainly presents all investors with challenges. But even in this environment, there is still a broad range of investment solutions that mean investors’ experiences do not have to be negative - even if some government bond yields still are.