- The prolonged environment of ultra-low yields coupled with large-scale global asset purchase programmes has exacerbated the search for yield. Carry strategies and low-volatility are part of this chase for yield.
- This complacency, in regards to riskier asset classes and low volatility, may be prolonged by the slow monetary policy normalization process. At the same time this may increase the level of systematic risks within financial markets.
- We suggest prudence for 2018 - use volatility as a hedge and prefer bond carry trades to improve the risk profile of diversified portfolios during episodes of market stress.
Low volatility, carry strategies and the search for yield - different facets of the same phenomenon
2018 Outlook: Twin peaks
VIsit our dedicated 2018 Outlook page for more insights from our experts
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