Portfolios designed for income-seeking investors looking to mitigate inflation and downside risk
Bond yields have risen dramatically since the beginning of 2022. That might look like great news for income investors but the return of high inflation and the potential impacts of recession make life more challenging.
Today, investors need to achieve a level of income that’s high enough to help offset elevated inflation and secure enough to withstand ongoing uncertainties. In this environment, we believe risk-aware outcome-oriented investing strategies can come into their own.
Euro-Area Government Bond Yields Have Risen Across the Curve
Soaring Inflation Spells the End of Negative Rates
For illustrative purposes only Source: Bloomberg
As of: 30 December 2022
For fixed-income investors, we believe risk controls and dynamic management will be highly important in the new era. Global multi-sector approaches to investing are also well suited to a quickly evolving landscape, as investors can closely monitor conditions and valuations and prepare to shift the portfolio mix as conditions warrant.
High-yield bonds are now offering attractive yields—and feature relatively low exposure to interest-rate risk—but they are also generally the most exposed to setbacks in the economy and in equity markets. To further reduce risk, we think it’s worth considering portfolios that focus on high-yield bonds with a short time to maturity.
There’s a strong case for adopting a balanced approach. Among the most effective active fixed-income strategies are those that pair government bonds and other interest-rate-sensitive assets with high-yielding growth-oriented credit assets in a single, dynamically managed portfolio.
For investors looking for risk-controlled portfolios with longer-term capital growth opportunities, multi-asset income solutions that can access equity and alternative investments are also worth a look.
At AB, we offer a range of fixed-income and multi-asset funds based on a combination of in-depth fundamental and quantitative research to help investors find the income and growth they need, consistent with the risks they can afford to take.
The value of an investment can go down as well as up and investors may not get back the full amount they invested. Capital is at risk.
The Portfolio/Fund is meant as a vehicle for diversification and does not represent a complete investment programme. Prospective investors should read the Prospectus, which includes Sustainability-Related Disclosures, and discuss risks and the Portfolio's/Fund’s fees and charges with their financial advisor to determine if the investment is appropriate for them. The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams and are subject to revision over time.
AB offers open-ended Luxembourg-based funds under AB FCP I, a mutual investment fund (fonds commun de placement) organized under the laws of the Grand Duchy of Luxembourg and AB SICAV I, an open-ended investment company with variable capital (société d’investissement à capital variable) incorporated under the laws of the Grand Duchy of Luxembourg.
Not all of the strategies and products we offer are available and/or registered for distribution in all jurisdictions. The sale of funds may be restricted or subject to adverse tax consequences in certain jurisdictions.
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This is a marketing communication. This information is provided by AllianceBernstein Limited, 60 London Wall, London, EC2M 5SJ. Registered in England, No. 2551144. AllianceBernstein Limited is authorised and regulated in the UK by the Financial Conduct Authority (FCA - Reference Number 147956). It is provided for informational purposes only and does not constitute investment advice or an invitation to purchase any security or other investment. The views and opinions expressed are based on our internal forecasts and should not be relied upon as an indication of future market performance. The value of investments in any of the Funds can go down as well as up and investors may not get back the full amount invested. Past performance does not guarantee future results. This information is directed at Professional Clients only and is not intended for public use.