22 Mar White Paper – ‘Specialty Fixed Income – Yield Enhancers for a Rising-Rate Environment’
By Voya Investment Management
As the term structure of interest rates gradually assumes a more nearly normal configuration in coming years, we believe fixed income investors will need to focus on new sources of incremental yield and return while reducing their expectations for investments that are more sensitive to duration risks. Given the structural impediments that may forestall or cap a rise in rates, allocations to specialty fixed income strategies may produce portfolios with higher yield potential, increased diversification and greater upside participation in the economic recovery. While some of the markets and strategies discussed are non-traditional, they offer investors an opportunity to benefit from untapped and potentially inefficient markets, even in range-bound or rising-interest-rate regimes.