Dovish central banks extend cycle: higher corporate credit allocation may be warranted



Portfolio Manager Mayur Saigal discusses the fixed income landscape and why a higher allocation to corporate credit may be warranted today versus 2018.
Key takeaways:
  • The dovish tone struck by central banks in 2019 is reminiscent of 2011 and 2012, when the Federal Reserve’s (Fed) and the European Central Bank’s (ECB) focus on pledging to do what it takes helped to dampen volatility and reduce both credit risk and term premiums.
  • The most significant difference is the starting levels of corporate credit spreads within investment grade and high yield, which are close to their long-term average levels and are likely to be range-bound from here.
  • Despite the range-bound environment, central bank actions appear to have extended the credit cycle and possibly warrant a higher allocation to credit today as compared to late 2018, but selectivity is required.

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

The information in this article does not qualify as an investment recommendation.

For promotional purposes.


Important message