The COVID-19 global pandemic has had a major impact on the lives and livelihoods of all people globally. Uncertainty still remains despite promising news on the vaccine front as we end the “year of the shutdown”. COVID-19, like other events that trigger market volatility, can affect valuations and create opportunities that we can take advantage of in the course of implementing our multi-sector relative value approach. Newfleet believes that spread sectors will offer better value than U.S. Treasuries and other government-related debt in 2021.
Newfleet continues its “up-in-quality” bias across portfolios while currently constructive on the macroeconomic outlook. Stabilizing economic fundamentals, combined with continued provision of excess liquidity (beyond the real economy’s needs) by the major central banks should support further appreciation of risk assets. Newfleet is confident that in this environment, we can exploit inefficiencies within sectors and take advantage of dislocations. Credit selection, a major driver of performance last year, once again is in focus based on valuations.