“We believe there are many competing forces at work and the path forward remains positive, yet murky,” BlackRock said.
Specifically, some factors that could throw a wrench into global economy include a potential slowdown in China, elevated prices across many asset classes and uncertainty surrounding the Trump administration’s ability to enact the initiatives the President-elect has promised.
“Weigh all of these factors and we still find ourselves late in economic expansion where income continues to be a dominant driver of return and elevated valuations will likely lead to moderate price appreciation,” BlackRock said. “Additionally, we expect more frequent spikes in volatility and a greater dispersion between winners and losers that could create attractive buying opportunities.”
Investors who are focusing on income generation can take a look at a number of preferred stock ETF options to bolster yields, including the PowerShares Preferred Portfolio (NYSEArca: PGX), Global X SuperIncome Preferred ETF (NYSEArca: SPFF), First Trust Preferred Securities and Income ETF (NYSEArca: FPE) and SPDR Wells Fargo Preferred Stock ETF (NYSEArca: PSK).
Alternatively, investors may also consider the PowerShares Variable Rate Preferred Portfolio Fund (NYSEArca: VRP) in a rising rate environment. Variable-rate preferreds usually trade more like bonds with shorter durations, so more conservative investors may find the lower-risk profile more appealing.
For more information on preferreds, visit our preferred stock category.