Why now is the time to increase exposure to alternatives

As multi-asset managers, we have historically been overweight to corporate bonds and specifically the financial sector ever since the Global Financial Crisis.

However, as global interest rates remain at or around all-time lows, record inflows into the asset class have been fuelled by global monetary policy easing as central bankers have cut interest rates a total of 66 times in the last year, according to J.P. Morgan. This has led to yields tending towards all-time lows and, incredibly, approximately a third of investment-grade debt trading at negative yields. Subsequently there are becoming ever more limited opportunities to earn an attractive absolute return from fixed income without taking significant credit risk.   In response to thi...