Our Company and Sites
August 2018

The new yield environment

Christopher Dhanraj
Director
Head of iShares Investment Strategy

Introduction:

  • Short-term and risk-free U.S. debt instruments currently offer investors the highest yields of the post-crisis period— outpacing inflation.
  • Coupled with a strong economic backdrop, risk-adjusted yields have increased in short-duration products versus longer-duration exposures, which helps underscore our overweight to short-duration. We also find that there are some multi-asset exposures that still offer attractive risk-adjusted carry amidst rising rates and a falling equity risk premium.
  • Investor flows into exchange traded products (ETPs) have shifted to the short end of the curve, rather than broad or longer-duration fixed income products. Flows into higher yield equity ETPs have also decelerated. This recent activity is a departure from trends observed throughout the broader post-crisis period.


Read the full paper