BlackRock Investment Institute (BII) is currently leaning towards government bonds with short and medium-term maturities, local currency debt from emerging countries, and European credit within the global high yield universe for an investment period of between six and twelve months.
The head of portfolio analysis at BII, Vivek Paul, explains in his latest outlook report that "We are more optimistic about short-term bonds, where higher yields offer attractive returns with lower duration risk."
This view is supported by the fact that uncertainties surrounding the sustainability of public accounts "lead investors to demand a higher term premium" on bonds with longer maturities, which, in the firm's opinion, reduces their relative attractiveness compared to shorter-duration debt.
Paul also emphasizes that, at this moment, more than 80% of the global fixed income market provides a yield above 4%, a circumstance that, as he highlights, investors can use to "secure substantial income without necessarily having to venture into the extremes of the yield curve or the credit risk spectrum."
However, BlackRock emphasizes that it is not enough to have a general exposure to the bond market, but considers a greater selection capability essential to capture the best income opportunities. In this sense, the entity points out that "This context of greater risk in the bond market and the creation of winners and losers by artificial intelligence (AI) among companies offers expert active investors the opportunity to take advantage of the greater dispersion existing in the fixed income universe," he stated.
In parallel, the manager maintains its inclination towards private market income assets, including infrastructure, which it continues to favor over growth assets within the same private realm.