Pursuing Sustainable Income with a Multi-Asset Approach

While today’s capital market valuations reflect the general optimism that a recession can be avoided, we believe activity levels may continue to deteriorate during the months ahead. The rise in the cost of money during the past two years has proven moderately effective at crowding out spending by both consumers and corporations alike. We suggest investors keep this prospective outcome in mind as they evaluate potential investment strategies. By placing focus on a solution with less sensitivity to index composition, managers and investors are able to emphasize areas of markets with greater opportunity, while avoiding others where the risk and reward balance is unfavorable.

Challenges of the current environment

Slowing Economic Growth
showing economic growth
Deteriorating Labour Market
labour market
Rising Credit Spreads
credit spread
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Marco Pirondini

Marco Pirondini

Head of Equities; US Portfolio Manager

For the first time in more than a decade, we believe it makes sense to include a higher fixed income allocation in global balanced strategies that aim to generate income.

Marco Pirondini, Head of Equities; US Portfolio Manager

Potential opportunities and how?

capital allocaiton

1. We believe a global, multi-asset approach with the flexibility to deploy capital across all geographies and asset classes can better equip investors to generate “sustainable” income while helping to balance the risks of today’s markets. 

2. The adoption of a more granular approach toward asset class definition offers the potential to identify attractive opportunities many investors are unable to recognize, or unable to capture. 

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opportunities

3. We favor assets we believe possess deep valuation support and strong free cash flow generation.

Hot Takes From Us

As investors seek effective strategies to enhance income, it is important to diversify portfolios, consider risk management, and, most importantly, avoid crowded sectors and overvalued securities. We believe a flexible, global multi-asset approach can help investors achieve their capital preservation and income generation goals. Importantly, it is our strong belief that adoption of a more nuanced definition set of asset classes, or micro-asset classes without constraint of benchmark orientation, affords investors the potential for identifying value in areas that may otherwise appear unattractive.

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