Is there meat in the fixed income space?
With the current interest rate scenario, we do not see an abundance of opportunities in the investment grade space in developed markets, although there are prospects with emerging market debt space Credit risk is a major concern for bonds in the coming months that makes debt investments less lucrative at the moment. We judge that the impact of the recent market developments will proliferate in the debt market space after 2020. Initial crack can be sensed this year like downgrades, though the action may prevail post 2020, unless we see a leadership oomph into the system with deep-dive recovery actions.
In the current market scenario where the markets have corrected significantly in the span of a month, we see a lot of blue-chip company stocks beaten down with good entry points available. Fixed income always forms a good (30%-40%) part of a balanced portfolio with tactical rebalancing required from time to time in order to get a good yield pickup from other asset classes. Equity combined with Yield Enhancers can be considered to get the robustness into the portfolios.