Q&A: Stay Flexible in Investment Grade Credit as the Hunt For Yield Continues

In recent years, demand for US dollar investment-grade credit has grown worldwide. Here, Robert Vanden Assem discusses frequently asked questions regarding investing in the most liquid credit market in the world.

Robert Vanden Assem, CFA
Head of Investment Grade Fixed Income and Chairman of Fixed Income Asset Allocation Team

Our target allocations are unchanged. Credit spreads have been resilient since last month even as the increased projections and the press conference to December’s 25-basis-point (bps) Federal Reserve rate hike had hawkish implications. Risk appetite continues to focus on expectations for US regulatory reform and what it could mean for nominal growth and inflation. Oil prices continue to firm following OPEC’s agreement and falling supplies, supporting risk assets. We see the potential for increased volatility ahead given the mature credit cycle, still historically low Treasury rates, and increased political uncertainty across many developed and emerging economies. However, we would look to increase allocations to riskier assets if we see a meaningful move wider in credit spreads.

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