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Field of Yields: Harvest Tips for Income Investors

With rising corporate debt, increasing leverage, declining rates, and a slowing economy, where do risk-averse investors turn for income? Virtus investment professionals weigh the options.

As U.S. Treasury yields languish and inflation hovers near post-crisis highs, investors are starved for income. Central bankers around the world continue to cut interest rates. What if interest rates stay low (or lower for longer), further eroding the real aftertax income investors can live on? Markets are expecting further rate cuts. In any case, the flexibility and agility of active fixed income managers will be key to navigating uncertainty ahead. Consider how Virtus views some of the traditional and non-traditional possibilities.

The Yields vs. Inflation Challenge

Image_Chart_The Yields vs Inflation Challenge

As of 8/31/19. Yield represents yield-to-worst, which is the lowest yield generated, given the potential stated calls prior to maturity. Bank loan yield represents current yield. Non-U.S. Dollar yield is Yield to Maturity Source: Bloomberg, Credit Suisse, FTSE, Virtus Performance & Analytics

Inflation Is Close to Post-Crisis Highs

Image_Chart_Inflation is Close to Post Crisis Highs

Source: Labor Department
Note: August 2019 figure is based on median estimate in a Bloomberg survey

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