Executive summary
If the past 12 months taught investors anything, it’s that being selective and diversified is key to riding the economic cycle. Had investors avoided risk assets on the back of many economists calling the “most anticipated recession” that never happened, they would have missed the stellar markets run led by higher yielding fixed income asset classes.
Looking ahead, VanEck’s latest portfolio compass dissects our observations on inflation, policy rates, economic growth, exogenous risks and exposures considerations.
In Australia, credit spreads may tighten due to favourable market dynamics, particularly in subordinated debt. Extending portfolio duration becomes increasingly attractive as the Reserve Bank of Australia (RBA) edges closer to an easing cycle.
Globally, seeking quality exposures is prudent in a tight spread environment. Striking the optimal balance between yield enhancement, diversification and managing volatility is essential to navigate these conditions effectively. This approach ensures that portfolios are well-positioned to capitalise on opportunities while mitigating risks associated with market fluctuations.
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