Fastened-income methods additionally look extra engaging to Erik L. Knutzen, managing director, co-head of the quantitative and multiasset funding crew and multiasset chief funding officer at Neuberger Berman Group.
“Credit score markets are nearer to pricing for a recession as spreads have widened, whereas authorities bond yields have risen with tighter central financial institution coverage,” he stated in an electronic mail. “As such, Neuberger Berman’s Asset Allocation Committee now sees extra yield to work with in fastened earnings, however stays cautious in equities, and continues to favor commodities, uncorrelated methods and money to mitigate potential volatility and allow opportunistic investments.”
Mr. Knutzen additionally stated he anticipates “excessive uncertainty and volatility” for at the least the following 9 to 12 months.
“In that surroundings, uncorrelated and short-term buying and selling methods stay helpful, as does money — as each a buffer in opposition to market volatility and dry powder for opportunistic investments,” he added. “The approaching months are more likely to be tough, however tough durations are these during which the foundations of potential long-term returns are constructed.”
Fairness traders, nevertheless, are going to really feel like they’re in a recession — whether or not or not there technically is one — because the valuation adjustment of the primary half of 2022 is about to be adopted by downward revisions to earnings forecasts within the second half, he stated. “We discover it tough to see how fairness markets can escape a second, earnings-related sell-off, after the valuation-related sell-off of the previous six months.”
Inside its common underweight view on equities, Neuberger favors lower-beta exposures, excluding a extra favorable view on vitality (for inflation publicity) and a much less favorable view on the buyer durables sector (in mild of the anticipated consumer-led slowdown).
Neuberger Berman had AUM of $447 billion as of March 31.