BlackRock Advises Adding CLO, CMBS to Credit Exposures

Bloomberg

Watch BlackRock Advises Adding CLO, CMBS to Credit Exposures - Bloomberg on Dailymotion

Transcript

00:00The drivers for the equity market, and again, it's primarily driven by U.S. equity markets,

00:06the earnings season that has been very strong, and obviously the AI theme,

00:10everything that you're hearing today over at your conference.

00:13But something that hasn't happened, given the strength of the U.S. equity market,

00:18is diversification, and particularly diversification away from U.S. assets and the stronger dollar.

00:25But remember, we're sitting here in Europe.

00:27Most investors are euro-denominated investors.

00:30And this diversification away from U.S. is something that I have seen happening

00:33within the fixed-income market.

00:35So you can diversify your fixed-income portfolio looking at European credit,

00:41but also other types of credit exposures, particularly within securitized,

00:45which gives you a completely different profile.

00:48Again, if people are worried about being maxed out in their allocations on IG credit,

00:52we think fundamentals are strong, but they can still get diversified income

00:57from assets such as securitized, CLOs, CMBSs.

01:01These are assets that they're not linked to corporate issuers.

01:04They're linked to consumer and other securitized assets.

01:07So there's still plenty of opportunities to anchor your fixed-income portfolio

01:12based on high-quality yields, but also gain some benefits from diversifying across regions

01:18and different issuer and security types.

01:24Vasiliki, given the steepening yield curves, certainly in Europe,

01:27and we've seen a little bit of rumbling in France,

01:30are there any, again, countries that look more attractive?

01:33How do you play that space?

01:34May I say first that the steepening yield curves that we've seen globally in Europe

01:41and in the US, but particularly in Europe, have been a major catalyst

01:45for investors putting cash to work.

01:48It's been the reason why we've seen fixed maturity strategies,

01:52such as iBonds ETFs, things that they mature like a bond,

01:55essentially gaining extreme traction this year.

01:59Because people, again, we talked about the demand for yield,

02:01but also people want stable income solutions,

02:06given some of the volatility that you alluded to in the bond markets.

02:11So if there is more scope for steepening curves later on from where we stand,

02:20potentially we have seen the curve steepening kind of moderating itself.

02:25Obviously, the ECB is where it should be when it comes to the rate decisions.

02:30The longer end, obviously, driven more by fiscal challenges.

02:36And, of course, in Europe, yes, we do have divergence of growth outlooks

02:40across northern and southern countries.

02:43So, yes, potentially there will be some further movements.

02:46But, again, when it comes to what does it mean for fixed income portfolios,

02:49I see that steepening of the yield curve,

02:51driving assets out of cash into the bond markets.

02:56Here we will be able to move forward to focusing on the growth outcomes Laura

Category

Transcript

Be the first to comment

Recommended