A good mix of equities and fixed-income assets has helped provide attractive returns. However, it may be time to underweight bonds and lean toward stock exchange traded funds.
BlackRock’s chief investment strategist for fixed income, Jeff Rosenberg, said that he would bet on stocks over bonds for 2015, reports Amanda Diaz for CNBC.
“I’d be a buyer of the stock market, just because the risk and reward,” Rosenberg said on CNBC. “The issue with bonds right now is there’s a skew to the potential returns. The upside is quite limited, given how low yields are. The difference with the stock market is there’s a more balanced risk and reward in terms of the upside versus the downside.”
Looking ahead, Rosenberg believes that the weak economic data over the first quarter was seasonal and will pass, and the economy could gain momentum in the second half.
“When you see the economic data change, the narrative around the bond market and the stock market will change at the same time.”
As economic activity picks up speed, investors tend to become more risk tolerant, investing in equities over fixed-income assets. While bonds have enjoyed a great start to the year on low inflation and low rates in Europe, Rosenberg argues that a combination of an improving economy and potential Federal Reserve rate hike in September could trigger a sell-off.