Income…with a Side of Growth Potential

Coming into 2024, many income investors expected falling inflation, slowing economic growth and rate cuts that would boost bond returns—a view that spurred record flows into investment-grade bonds. With rate cuts—at least in the US—on the back burner for now, that story has yet to play out. Adjusting to that reality has pushed bond yields even higher, leaving returns largely flat so far this year.

Equity markets, meanwhile, have rallied—the S&P 500, for example, is up nearly 10%. While risk-averse investors or those with a hearty appetite for yield may not want to step fully into equities, those seeking income with upside growth potential may want to consider a global multi-asset income approach.

So far this year (Display), such a strategy, combining equities, credit and government bonds, would have outperformed high yield and investment-grade credit while also delivering a healthy yield of 4.8%. That’s a substantial advantage over the 4% yield of global investment-grade bonds.