No magic formula needed: Three simple pillars to navigate credit markets in 2021

Long-term strategies to win the day

The combination of slowly improving economic data, the implied backing of the US Federal Reserve, and positive vaccine news provides the market with supportive tailwinds moving into 2021. But while optimism is returning to markets, tightening credit spreads, 2021 promises to be a challenging year.

The pandemic's legacy will leave deep economic scars and we are likely to see further market dislocation as the winners and losers become more clearly defined. Against this backdrop, plotting a safe course through US credit markets demands conviction and discipline. While the pandemic might be a once-in-a-century event, acute volatility periods are nothing new in financial markets. To navigate through these periods of distress, we suggest three time-tested investment pillars approaching credit markets this year. Pillar 1: Look for a wide margin of safety The worst outcome in c...