Thanks to central banks’ ultra-loose monetary policies, financial markets have delivered five consecutive years of handsome capital market returns since 2008.
-Andrew Bosomworth, managing director, PIMCO
- As yields on assets decline, central banks’ ultra-loose monetary policies are effectively forcing investors further out the concentric circles into lower quality, more illiquid sectors in search of positive yielding assets after deducting inflation.
- In order to achieve 6%-7% returns in the future, investors may be required to take on more risk. Meanwhile cash equivalents, typically the safest alternative, yield literally nothing.
- Allocating part of a portfolio away from “middle circle” asset classes into assets with higher return potential as well as assets offering liquidity is the right strategy in our opinion.