Peach

Income for every Outcome

In today’s world, there are more questions than ever. We may help you find the right income opportunities to build a more secure future for yourself and your loved ones – no matter what lies ahead.

Make the right call

Listen to BlackRock experts chat about fast-moving trends in the bond market, break down how to build resilience into portfolios – and where to find income amid market volatility. Plus, look for fun explainers on financial terms planted in the chats while you’re at it.

There has been no shortage of volatility in our markets

So look, it’s a really strong backdrop with very good corporate profits

So where do you think the big opportunities are going to be for income? 

Evening, Michael, how are you?

Belinda, good to see you. It’s been a while. How have you been?

We’re good. Thanks. Beautiful day here in Hong Kong.

We haven’t connected a while, I just wanted to talk about kind of 2022 and your outlook for Asia. There’s been all this attention on China obviously. We’re watching closely what’s happening in the credit markets and in China property, given our own focus on income. I just want to kind of hear how you’re thinking about the outlook for 2022?

Well, that’s right, Michael, there has been no shortage of volatility in our markets, and it has been driven by China this year. We’ve seen policy tightening, regulatory crackdown, energy shortages and then financial deleveraging and all of that has had a significant impact on economic growth.

But, you know, as I look now into 2022, we do expect policy to start easing and that’s going to be a more supportive backdrop for risk assets. And one thing I think doesn’t change going forward is the relative attractiveness of yields in this part of the world versus global counterparts.

We actually think improving credit fundamentals are going to help across both investment grade and high yield. And therefore, for a global investor, I think maintaining an allocation to Asia is going to be really important to get the income that they need.

The yields in Asia right now really stand out especially to your point on relative to the other markets around the world.

So how about you, Michael? Our investors here are laser-focused on higher inflation and what the central banks are going to do in 2022. What are your views?

So look, it’s a really strong backdrop with very good corporate profits and consumers, in general, have very good balance sheets.

There’s a lot to like. I think this is going to persist through the year, and it’s a good backdrop for risk assets like stocks and high-yield bonds.

On the inflation side, I think it’s going to be stubbornly high for the first half of the year. I don’t think a lot of these problems are just going to go away suddenly – it’s going to take a while to work through this. But I think by the second half of the year, it’s going to be clear that the worst is behind us and inflation will be less of a problem. And I think for the Fed, that really means that they’re going to accelerate their pace of tapering.

But we do think that rate hikes are going to be slow and they’re going to be probably steady.

So, we’re going to see high interest rates this year and we’re going to see inflation in the short term. But when you look at it, interest rates are still low globally. So where do you think the big opportunities are going to be for income, Michael?

So, we’ve seen volatility from the growth stocks more recently. I think that’s going to be persistent through the year. They still can do well, but I think another place for investors to look is really at more dividend-oriented stocks, which had a good year in 2021 but you look at the relative valuation in that part of the equity market. I think it’s pretty eye catching. It’s hard to find good value and I think the dividend, especially dividend growth-oriented companies, big global companies.

Another thing to consider is yield remains to your point going to really low, and yield remains incredibly high demand globally and there happens to be very little supply. Usually when there’s that kind of mismatch, it’s a good environment to own higher yielding assets, like high yield bonds, particularly like US yield bonds, floating-rate bank loans, CLOs.

What is actually floating in a floating-rate bank loan?

A floating-rate bank loan is a corporate loan where the coupon rate floats—adjusting regularly to reflect changes in short-term interest rates and market environment.

Okay

Unlike traditional bonds where the coupon is fixed, floating rate loans can generate higher or lower income as interest rates rise or fall. That’s why they are a popular way to protect against interest rate movements.

Finally I’d say look, valuations on equities are pretty high in many, many different markets around the world, meaning that there’s probably less upside for stocks in 2022 than there was a year ago when evaluations are a little more reasonable. So, we think it’s a good environment for single stock covered call writing. Those are some of our favorite ideas for 2022.

Well, great to hear Michael, there are still lots of new opportunities actually, given the economic backdrop is very different from what we’ve had in 2021.

Yeah, I think it will be a fine year and it’s been a while, so I’m glad we could catch up. It was great to see you

Great to see you too. Thanks Michael.

Take care.

There has been no shortage of volatility in our markets

So look, it’s a really strong backdrop with very good corporate profits

So where do you think the big opportunities are going to be for income? 

Evening, Michael, how are you?

Belinda, good to see you. It’s been a while. How have you been?

We’re good. Thanks. Beautiful day here in Hong Kong.

We haven’t connected a while, I just wanted to talk about kind of 2022 and your outlook for Asia. There’s been all this attention on China obviously. We’re watching closely what’s happening in the credit markets and in China property, given our own focus on income. I just want to kind of hear how you’re thinking about the outlook for 2022?

Well, that’s right, Michael, there has been no shortage of volatility in our markets, and it has been driven by China this year. We’ve seen policy tightening, regulatory crackdown, energy shortages and then financial deleveraging and all of that has had a significant impact on economic growth.

But, you know, as I look now into 2022, we do expect policy to start easing and that’s going to be a more supportive backdrop for risk assets. And one thing I think doesn’t change going forward is the relative attractiveness of yields in this part of the world versus global counterparts.

We actually think improving credit fundamentals are going to help across both investment grade and high yield. And therefore, for a global investor, I think maintaining an allocation to Asia is going to be really important to get the income that they need.

The yields in Asia right now really stand out especially to your point on relative to the other markets around the world.

So how about you, Michael? Our investors here are laser-focused on higher inflation and what the central banks are going to do in 2022. What are your views?

So look, it’s a really strong backdrop with very good corporate profits and consumers, in general, have very good balance sheets.

There’s a lot to like. I think this is going to persist through the year, and it’s a good backdrop for risk assets like stocks and high-yield bonds.

On the inflation side, I think it’s going to be stubbornly high for the first half of the year. I don’t think a lot of these problems are just going to go away suddenly – it’s going to take a while to work through this. But I think by the second half of the year, it’s going to be clear that the worst is behind us and inflation will be less of a problem. And I think for the Fed, that really means that they’re going to accelerate their pace of tapering.

But we do think that rate hikes are going to be slow and they’re going to be probably steady.

So, we’re going to see high interest rates this year and we’re going to see inflation in the short term. But when you look at it, interest rates are still low globally. So where do you think the big opportunities are going to be for income, Michael?

So, we’ve seen volatility from the growth stocks more recently. I think that’s going to be persistent through the year. They still can do well, but I think another place for investors to look is really at more dividend-oriented stocks, which had a good year in 2021 but you look at the relative valuation in that part of the equity market. I think it’s pretty eye catching. It’s hard to find good value and I think the dividend, especially dividend growth-oriented companies, big global companies.

Another thing to consider is yield remains to your point going to really low, and yield remains incredibly high demand globally and there happens to be very little supply. Usually when there’s that kind of mismatch, it’s a good environment to own higher yielding assets, like high yield bonds, particularly like US yield bonds, floating-rate bank loans, CLOs.

What is actually floating in a floating-rate bank loan?

A floating-rate bank loan is a corporate loan where the coupon rate floats—adjusting regularly to reflect changes in short-term interest rates and market environment.

Okay

Unlike traditional bonds where the coupon is fixed, floating rate loans can generate higher or lower income as interest rates rise or fall. That’s why they are a popular way to protect against interest rate movements.

Finally I’d say look, valuations on equities are pretty high in many, many different markets around the world, meaning that there’s probably less upside for stocks in 2022 than there was a year ago when evaluations are a little more reasonable. So, we think it’s a good environment for single stock covered call writing. Those are some of our favorite ideas for 2022.

Well, great to hear Michael, there are still lots of new opportunities actually, given the economic backdrop is very different from what we’ve had in 2021.

Yeah, I think it will be a fine year and it’s been a while, so I’m glad we could catch up. It was great to see you

Great to see you too. Thanks Michael.

Take care.

A spectrum of income solutions for every outcome

Broaden investment scope to find higher yield opportunities

Source: Bloomberg. As of March 2022. Index returns are for illustrative purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Fixed income yields represented by yield-to-worst, equity yields by 12 month dividend yield, preferred stock yield represented by indicated dividend yield . US Treasuries: Barclays US Treasury 7-10 Yr, German Bunds: Benchmark 10Y German Bund, Global Inv Grade: Barclays Global Agg Corporate (USD). US High Yield: US HY Barclays US HY 2% Issuer Cap. Global Equities: MSCI World. Global Dividend Equities: MSCI World High Div Yield. EM Equities: MSCI World EM. Bank Loans: S&P/LSTA Leveraged Loan Index. EMD: JPM EMBI Global. Preferred Stock S&P Preferred Stock. REITs: FTSE NAREIT All REITs Index.

With yields at record lows, investors are realising they need to look beyond traditional fixed income to generate meaningful returns in order to meet their income goals. Investors need to go beyond bonds and rethink their portfolios, to meet their income and return targets in a low-yielding world.

BlackRock’s comprehensive income capabilities may optimise yield for risk, delivering for specific income objectives depending on your portfolio.

Learn how we deliver income through our range of asset classes that cater to different outcomes, whether it be reaching for higher yield, income and growth, or portfolio resilience.

Key takeaways for investors

Diversification
Go beyond asset class diversification
Have a granular analysis of your portfolio at country and sector levels.
Income
Consider non-traditional sources of income
This includes covered call writing, floating rate loans, listed real asset securities, global REITs etc.
Access Key
Tap into private investment opportunities
With the aim to deliver similar income as publicly listed assets with a lower correlation.
Sustaimability
Apply a lens of sustainability
Sustainable funds can bolster resiliency.
Video Player-2,Related Materials-1
Video Player-3,Related Materials-2
Image-2,Related Materials-3
Image-3,Related Materials-4

Why invest in Asian Fixed Income?

Neeraj:

Overall, we have a positive view for Asian FI assets in the medium to long term even as we remain deliberate in risk positioning in the near term. 

Most Asian countries entered the year on a reasonable footing in terms of growth, inflation and policy. The inflation backdrop, which remains a challenge in a number of developed markets, was less of a concern in most Asian economies and growth prospects are improving as many regional economies are reopening.

In terms of the effects of the conflict in Ukraine, the transmission is through the direct impact on oil and commodity prices as well as a potential growth impact through the slowdown in European growth. Most Asian economies (excluding Malaysia) are net importers of oil and the recent increase in the price of oil and hard commodities poses some risks for Asia through the current account and balance of payments, as well as inflation, and may introduce some uncertainty to monetary policy. 

We remain positive for Asian fixed income assets due to the following reasons:

1. Overall, the nominal and real rates in Asia remain significantly more attractive compared to developed markets

2. Macro-economic stability and exchange rates in Asia remain on a stable footing relative to other parts of developed markets and rest of emerging markets. This offers an attractive return potential for long term investors

3. In terms of China, we remain positive on policy direction with expectation of monetary easing through a combination of rate cuts and liquidity easing in coming quarters till end of 2022.

4. Stability of China rates and FX will remain a lynchpin for most of Asian economies given the increased supply chain linkages across Asia.

Stable macro-economic fundamentals in Asia

Regional macroeconomic and exchange rate stability makes Asia stand out relative to developed markets and the rest of emerging markets and offers long-term investors an attractive return potential.

Compelling nominal and real yields and credit quality

Asian fixed income offers higher yields at a lower duration vs. global counterparts of similar credit quality1.

Opportunities in China

Stability in Chinese rates and FX will remain a lynchpin given the supply chain linkages across Asia. We remain positive on China’s policy direction with expectations of easing throughout 2022.

Why invest in Multi- asset Income?

Multi-asset income outlook Q2 2022

My name is Zach Bevevino, and I'm a product specialist within BlackRock multi-asset group. Thank you very much for joining us today. Today, we wanted to talk to you about some of the specific market challenges we see investors facing today. And some strategies to address those, which is what I'll cover. So to set the stage here, we're seeing some of the highest market volatility that we've seen in the last 10 years, excluding March 2020, which was the onset of the pandemic. Now, the two main catalysts for this are central banks moving away from an era of ultra-loose monetary policies, and the tragic and terrible events we're seeing play out in Ukraine.

This is creating a lot of uncertainty and confusion for investors. But when you boil it all down, we really see three main market challenges for investors today. The first is that higher inflation is going to make safe assets more risky. The second is that higher inflation is also likely to lead to rising interest rates, which we're seeing play out right now. And the third is that the path forward from here is more uncertain than normal. So let's dig into these for a few minutes.

On the first point around inflation, we're seeing the highest levels of inflation in the last 40 years. There are a lot of contributing factors to this. But the Ukraine and Russia scenario is really adding fuel to the fire. And the challenge that we see is that bond yields and saving rates aren't keeping up.

And what this means is ultimately, that by sitting in cash or low yielding assets, you're actually losing money, because inflation is eroding the value of your investment. And this can be really problematic. And the myth that a lot of investors have is that by investing conservatively, you're actually protecting your assets. But we're really arguing against that today because of the higher inflation backdrop.

Now, the second point that we would note is that higher inflation is also likely to lead to higher interest rates. And you're already seeing this play out. And you could see this on the page in front of you. We are  showing expectation for higher interest rates in 2022. And in 2023, for major economies across the globe.

Now the challenge for bond investors is they have to deal with two issues now: higher inflation, eroding the value of their investment, and then higher interest rates also acting as a headwind to their returns.

And really, the main takeaway here is that where investors have normally gone in periods of higher market volatility, cash and conservative bonds, those areas look much less attractive today. And so we do think investors are going to have to think a bit differently.

But if we go to the last point here, the challenge of investing beyond cash and conservative bonds is that we are in a more uncertain world. And you can see that with the volatility that we're seeing play out in markets today. Now, one way to measure this on a go forward basis is to look at Wall Street's estimates of major macro variables, and where do they see them in the next couple of years. And so what we expect interest rates to be higher here, but you can see on the page that if you look at the highest estimate, and the lowest estimate of where the 10 year Treasury yield will be, you can see the highest estimate is around 4.5% by 2024. And the lowest estimate is around 1.7%. And today, we're about 2.5%. Now, depending on who is right here, the market outcomes are going to be very, very different. And a similar thing can be said around expectations for what global growth will be.

And the takeaway is that it's going to be very difficult for investors to figure out exactly how markets move forward from here.

We do think this is where diversification comes into play. And this backdrop we think investors will need to stay nimble, but we remain favorable on a few key asset classes, including dividend paying stocks, real assets, covered calls, and higher yielding corporate bonds in the US, and ultimately in these uncertain times, our multi-asset income strategies can help investors fight inflation by tapping into higher yielding assets, protect investors from rising interest rates by taking a flexible approach, and most importantly, stay very well diversified to defend off higher market volatility

Broadens opportunity set for finding consistent, compelling income

With interest rates across many bond markets expected to remain lower for longer, finding attractive income has become harder than ever.

Flexibility to adapt to changing markets

Investors must be ready to adapt to ongoing virus uncertainty, elevated valuations and market volatility.

Why invest in Global Fixed Income?

High yield remains one of the highest income-producing assets

Source: Bloomberg Barclays, Bloomberg, data as of 31 August 2021. Global high yield = BBG Barclays Global HY Index. U.S. high yield= BBG Barclays US High Yield 2% Issuer Capped Index. Global Aggregate = BBG Barclays Global Aggregate Index. US Aggregate = BBG Barclays US Aggregate Index. U.S. IG = BBG Barclays US Corporate Investment Grade Index. EM USD =Barclays Emerging Market USD Bond Index. Index performance is for illustrative purpose only. You cannot invest directly in an unmanaged index.

Structural demand for income persists

High yield bonds still have the potential to offer attractive income in a low-yield world, while global investment grade bonds generally provide higher income than government bonds.

Flexibility to adapt to changing markets

Active sector and security selection allows investors to take advantage of attractive income opportunities.

Portfolio protection

Global investment grade bonds provide investors with high quality exposure which may protect total portfolio returns during volatile markets.

Why invest in Equity Income?

Yield and Dividend growth account for the lion’s share of returns over time

Bloomberg. Returns from 1871 to 30 June 2021. From June 1926 monthly dividend and earnings data are computed from the S&P 500 Index. Prior to 1926 data is taken from Cowles and associates (Common stock Indexes). For further information please refer to http://www.econ.yale.edu/~shiller/data.htm.  Index performance is shown for illustrative purposes only and does not predict or depict the performance of any BlackRock fund. It is not possible to invest directly in an index. Past performance does not guarantee future results.

Improving outlook to global dividends

As economic recovery continues to play out, we see an improving outlook to global dividends in the short to medium term, suggesting dividend payments will increase by around 6.5% in 2021.4

For capital and sustainable income growth

Our equity income strategies focus on delivering both capital returns and income growth through investing in companies with sustainable and growing dividends.

Why BlackRock for Income?

Globe icon
Breadth of Expertise
Our market access and scale extends across regions, asset classes and investment styles, helping you to achieve your optimal income allocation.
Choice arrow icon
Flexible Implementation
We seek to deliver income in various forms. Our funds can fit as a core, satellite or tactical allocation into your portfolio, preferences and investment goals.
Binoculor icon
Focus on Risk Management
Our in-house technology and dedicated risk and quantitative analytics teams help mitigate unwanted surprises.