The Federal Reserve has signaled on multiple occasions that they will keep interest rates higher for longer, much to the chagrin of some investors. The Fed’s policies, mixed with a myriad of economic headwinds, have simultaneously opened up new opportunities for investors, including parking investments in fixed-income.
John McClain, Brandywine Global Portfolio Manager, joins Yahoo Finance to discuss his views on the Fed’s policies, where its true intentions lie, and how investors should frame these new opportunities.
“This is a generational opportunity for investors to shift capital away from equities into fixed-income. The relative attractiveness of fixed-income compared to equity markets is the strongest it’s been in 20-plus years,” McClain says on the current economic environment. “What we think is areas of the market that are relatively short-term duration, are particularly interesting in this point in time, so we highlight high-yield at 9.5% yield, forming kind of a Goldilocks opportunity for investors with low default rates, low dollar price bonds, and high yields.”
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