Multi Sector - Value in Spread Sectors; Credit Selection is Key
The final quarter of 2019 continued to show that investors maintained their appetite for risk assets. Fixed income markets have responded favorably during the year to the dovish pivot by global central banks, the positive developments on the trade front, as well as signs of stability in economic data. Geopolitical developments (e.g., trade, Mideast tensions, and European politics) and central bank headlines all continue to be significant market movers. Recession fears have eased but are likely to remain topical given the age of the business cycle. We continue to monitor market fundamentals, technicals, and valuations and are finding that volatility continues to create selective investment opportunities and shape asset allocation decisions. Global central banks have embarked on monetary policy easing to support growth, but recent signals suggest policy is on hold for the foreseeable future. The prospect for fiscal accommodation will feature prominently in 2020.
The commentary is the opinion of the subadviser. This material has been prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice or an offer of securities.
Past performance is not indicative of future results.
Bloomberg Barclays U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. Bloomberg Barclays Municipal Bond Index is a market capitalization weighted index that measures the long-term tax-exempt bond market. J.P. Morgan GBI-EMGD tracks total returns for local currency debt instruments issued by emerging markets sovereign and quasi-sovereign entities to which international investors can gain exposure. J.P. Morgan CEMBI Index tracks U.S. dollar-denominated debt issued by emerging market corporations. J.P. Morgan EMBI Global Index tracks the total return for the U.S. dollar-denominated emerging markets debt, including Brady bonds, Eurobonds and loans. The Credit Suisse Leveraged Loan Index is a market-weighted index that tracks the investable universe of the U.S. dollar denominated leveraged loans. The Bloomberg Barclays U.S. High-Yield 2% Issuer Capped Bond Index is a market capitalization-weighted index that measures fixed rate non-investment grade debt securities of U.S. and non-U.S. corporations. No single issuer accounts for more than 2% of market cap. The indexes are calculated on a total return basis. The indexes are unmanaged, returns do not reflect any fees, expenses, or sales charges, and are not available for direct investment.