Omicron May Not Be as Severe After All: Investing Amidst Uncertainty

It may be too early to draw any kind of definitive conclusions regarding the severity of Omicron, but initial findings seem to be “encouraging” according to Dr. Anthony Fauci, the White House’s Chief Medical Advisor, reports CNBC.

Early reporting and data from South Africa seems to indicate that Omicron might not be nearly as severe as previous variants, but it is still too early to tell anything definitive, Fauci warned. With 15 states thus far reporting positive cases of the newest COVID variant, if these early indications turn out to be true, it could be a ray of hope amongst a seemingly unending pandemic.

“We’ve really got to be careful before we make any determinations that it is less severe, or really doesn’t cause any severe illness comparable to delta, but thus far the signals are a bit encouraging regarding the severity,” Fauci told CNN.

The South African Medical Research Council released a report on Saturday detailing milder cases overall, but also a more frequent impact on younger people; this could be linked to lower vaccination rates, but it is uncertain for now. The report pulls from a small data sampling, and longer and greater observation is needed to determine with any certainty how Omicron impacts people, but thus far, most infected were not oxygen-dependent, a key risk of previous variants.

Omicron is so far believed to be amongst the most transmissible variants to date, much as Delta was, but while there was an increase in hospitalizations in South Africa, there hadn’t yet been an increase in the risk of death. However, both vaccine makers and experts have warned that it may take several weeks for the actual risk profile to be fully known for Omicron.

“We do see an increasing growth rate, we see increasing numbers of omicron being detected,” Maria Van Kerkhove, the COVID-19 technical lead for the WHO, said during a press briefing Friday. “There is a suggestion that there is increased transmissibility, what we need to understand is if it’s more or less transmissible compared to Delta.”

Investing for Economic Uncertainty

With much still unknown for Omicron and its potential effects on the economy, the American Century Multisector Income ETF (MUSI) is an excellent option for investors who are seeking income potential that is risk-adjusted in the midst of any market environment.

MUSI is an actively managed ETF that seeks diversified exposures across investment-grade corporate, high-yield, securitized, and emerging market bonds.

The portfolio managers rotate sector allocation depending on the global macroeconomic outlook combined with the relative valuation between sectors. This sector allocation considers inflation, economic activity, and monetary policy utilizing fundamental research and quantitative modeling.

MUSI invests in both investment-grade corporate bonds and high-yield “junk bonds.” The fund can also invest in preferred stock, convertible securities, bank loans, and other equivalents within equities. By investing in securitized credit instruments, the fund is capable of liquidity in times of market movement. Investing in high-yield bonds typically means shorter durations that are less affected by rising interest rates, as well as the ability to capture the call price of a company refinancing to lock in lower rates before rates rise further. This penalty is rolled into the returns for high-yield bonds and equates to even greater returns for investors.

The investment allocations for MUSI as of the end of October were 50.19% into credit, 25.13% into securitized, 17.29% into emerging markets, and 6.41% into equities.

MUSI carries an expense ratio of 0.35% and has an option adjusted duration of 3.6 years.

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