What’s Next: Spring Update Investment Actions

BlackRock | April 12, 2013 | Topics: Fixed Income,  Equities,  Economic Outlook,  Investing for Income 

The perception that risks have receded are tempered by the growing reality that risks may be rising. Markets have powered forward and left economic fundamentals behind, the United States still faces serious fiscal issues and Europe is far from reform or economic growth. We encourage investors to remain committed and invested, while exercising due diligence and a measure of prudence. What follows are our best recommendations for the current investing environment:


Investor demand has pushed interest rates to such lows that it presents new risks. To achieve income and return, traditional strategies that worked in the past may not work in the future. We recommend:

  • Allocate to Flexible Core Bond Alternatives
  • Increase Exposure to Credit Sectors
  • Implement Long/Short Strategies

Historically low yields within traditional fixed income is causing investors to generate income in their portfolios. Casting a wider net for income will be key. We recommend:

  • Implement Solutions That Balance Income and Risk
  • Invest in Non-Traditional Income Sources
  • Allocate to Municipal Bonds for Tax-Advantaged Income

Equities remain attractive and should be the foundation for meaningful long-term growth. However, mitigating volatility is critical. We recommend:

  • Allocate to Flexible, Unconstrained Strategies
  • Invest in High Quality, Dividend-Paying Equities
  • Implement Alternative Strategies

Read Full Report

 

About the Author

Russ Koesterich, CFA
Chief Investment Strategist for BlackRock and iShares Chief Global Strategist

Jeffrey Rosenberg
Chief Investment Strategist for Fixed Income

Peter Hayes
Managing Director, Head of Municipal Bonds Group

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The stated investment preferences are the opinions of the authors and do not reflect individual investors' risk and return goals. Individual investors should consult with their financial professional about how to implement these opinions in a portfolio that is suitable for their goals and risk tolerance. These views do not necessarily reflect the investment decisions made within specific BlackRock portfolios. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of April 15, 2013, and may change as subsequent conditions vary. Individual portfolio managers for BlackRock may have opinions and/or make investment decisions that, in certain respects, may not be consistent with the information contained in this report. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.

Investment involves risks. Stock and bond values fluctuate in price so that the value of an investment can go down depending on market conditions. There is no guarantee that companies will continue to pay dividends. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are typically heightened for investments in emerging markets. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. There may be less information available on the financial condition of issuers of municipal securities than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. A portion of the income from municipal securities may be taxable.

Prepared by BlackRock Investments, LLC, member FINRA.

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