He said yields may vary, but levels above 5 per cent are not uncommon, because of the higher risk in these areas.
But you don’t have to go too far out to find yield, even in a global environment of tighter spreads and low liquidity. Mr Leyland says: “Investments in non-traditional areas can be blended with traditional income-producing investments, such as government bonds and better quality corporate debts.”
However, to find the right blend of fixed income, Mr Leyland believes it is important to “incorporate bottom-up, fundamental, relative value and macro viewpoints, which matter a great deal when looking for yield.”
Dan Ivascyn and Alfred Murata, managers of the Pimco Income Fund point out, however, that the global fixed income market is huge – currently US$100trn in size, so there are many different sectors available for managers to take advantage of to help generate income and try to preserve capital.
Mr Ivascyn says: “The ability to be opportunistic is important when trying to capitalise on dislocations.
“The fund can tactically shift portfolio weightings across sectors with attractive yields and risk-adjusted returns in this increasingly complex and volatile investment environment.”
simoney.kyriakou@ft.com
