In particular, investors may want to take on some selective risk in asset classes that have become less expensive. One example of such an asset class: U.S. high yield.
High yield bonds have come under pressure lately, and as a result, are now looking relatively attractive. Spreads recently widened out to the highest level in a year, indicating that high yield now offers better value and yield. In short, given that corporate America remains strong and default rates low, high yield now looks likely to provide a reasonable level of income relative to the rest of the fixed income market.
Sources: BlackRock research, Bloomberg
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here.