{"id":127957,"date":"2021-06-07T20:35:47","date_gmt":"2021-06-07T20:35:47","guid":{"rendered":"https:\/\/precoinnews.com\/?p=127957"},"modified":"2021-06-07T20:35:47","modified_gmt":"2021-06-07T20:35:47","slug":"when-times-are-uncertain-look-at-non-traditional-assets-to-enhance-portfolio-yield","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/when-times-are-uncertain-look-at-non-traditional-assets-to-enhance-portfolio-yield\/","title":{"rendered":"When times are uncertain, look at non-traditional assets to enhance portfolio yield"},"content":{"rendered":"
Globally, investors are becoming increasingly concerned about inflation, which has cast a pall on once high-flying equity and debt markets. China\u2019s outlook appears mixed as the credit growth slowdown has impacted pockets of the economy, whilst corporate defaults are uncomfortably high. As for the rest of Asia, many countries may see their economic recoveries cut short by a new wave of Covid-19 infections, given slow vaccine roll-out in many places.<\/p>\n
The global outlook is highly uncertain on many fronts, creating a conundrum for investors since both bond and equity values may be at risk in the short term. For example, should inflation continue to edge higher as predicted by many analysts, corporate earnings could be hit by rising costs, depressing stock valuations, while bond values may fall as investors demand higher returns. U.S. Federal Reserve guidance towards inflation expectations remains the near-term risk for markets.<\/p>\n
To help resolve the dilemma of a low-yielding environment, income-seeking investors should start looking at non-traditional asset classes that can potentially generate higher income.\u00a0<\/p>\n
As seen from the table below, assets such as preferred securities and real estate investment trusts (REITs) offered better yields compared to U.S. government bonds and higher quality corporate bonds. Such investments also have moderately low correlation to investment-grade bonds, providing greater diversification to portfolios that comprise mostly stocks and bonds.<\/p>\n
While income investments may lag global equities in delivering returns (which includes yield and capital appreciation) over the long term1<\/sup>, they add diversification to one\u2019s portfolio and also offer alternative sources of income when markets are down.<\/p>\n