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Fixed income strategies for low and rising rates
- Despite concern about rising rates, the more serious issue for
institutional investors is historically low yields and the outlook
for below-average fixed income returns in the future.
- The eight-year bull market and benign credit environment
have largely masked the risks of increasing equity exposure or
relying on a broad U.S. bond market benchmark to meet
expected rates of return.
- Diversifying fixed income portfolios with “plus” sectors, such
as emerging market debt and floating rate loans, and private
strategies — middle market senior loans and mezzanine debt
— can be a partial solution to low yields and rising rates.4
2 Pensions & Investments, 28 May 2018. Rankings based on institutional tax- exempt assets under management as of 31 Dec 2017, reported by each responding asset manager.
3 ANREV/INREV/NCREIF Fund Manager Survey 2018; survey-illustrated rankings of 162 fund managers globally by AUM as of 31 Dec 2017.
4 Investments in middle market loans are subject to certain risks: credit risk and potentially limited liquidity, as well as interest rate risk, currency risk, prepayment and extension risk, inflation risk, and risk of capital loss.
5 Includes 285 real estate investment professionals, supported by over 250 Nuveen employees.