Investors and financial advisors of today are faced with the challenge of historically low interest rates. In addition, corporate bond spreads have returned to pre-pandemic readings and do not offer as much in terms of relative value.
In the upcoming webcast, An Income-Focused Solution for a Yield-Challenged Environment, Kevin Flanagan, head of fixed income strategy at WisdomTree Asset Management, and Chris Acito, CEO and CIO of Gapstow Capital Partners, will discuss a potential solution to seeking income in this yield-challenged environment.
“Yields on fixed income securities declined considerably since the financial crisis and the COVID-19 pandemic has put further downward pressure on interest rates with the Federal Reserve intending to keep rates low until labor market conditions improve,” according to WisdomTree.
“In the current low yield environment, investors are increasingly favoring alternative credit for higher income as a substitute or a complement to traditional fixed income.”
The recently launched WisdomTree Alternative Income Fund (HYIN), which tracks the Gapstow Liquid Alternative Credit Index, is an alternative income strategy that can help income seekers bolster their yield generation.
The underlying Gapstow Liquid Alternative Credit Index provides diversified exposure to alternative credit sectors.
Gapstow defines alternative credit as debt-based investments whose yield and/or expected return is higher than investment-grade fixed income securities, according to WisdomTree. These debt investments include a range of securities across a broad universe of borrower segments, such as households, corporations, and commercial real estate sponsors.
Specifically, Gapstow offers an alternate way for access through Publicly Traded Alternative Credit Vehicles, which are the subset of business development companies, closed-end credit-centric funds, and mortgage real estate investment trusts that specialize in alternative credit investing.
This alternative credit exhibits less sensitivity to changes in interest rates. Additionally, the asset class offers diversification benefits, as it has exhibited moderate correlation to traditional asset classes and very low correlation with the Bloomberg U.S. Aggregate Bond Index.
Financial advisors who are interested in learning more about income-focused investment solutions can register for the Tuesday, September 28 webcast here.