Valuations have also skyrocketed in corporate debt markets, as investors’ quest for profitability has pushed credit spreads (the premium investors receive for taking risk) to their lowest levels in the last 15 years.
With growth slowing and finding affordable stocks and bonds difficult, security selection is more important today than ever. “Given the potential risks in the current environment, I try to balance my investment portfolios, seeking exposure to companies with pricing power, sustainable growth and growing dividends,” says equity manager Diana Wagner.
Damien McCann, Fixed Income Manager, thinks the same. «In the absence of evident courage, I am very selective in high yield and investment grade debt sectors, trying to find the right balance between risk and opportunity ».