TY - JOUR T1 - Assessing the Current Role of Fixed Income and Risk Assets JF - The Journal of Investing SP - 31 LP - 33 DO - 10.3905/joi.2015.24.1.031 VL - 24 IS - 1 AU - W. Eric Overbey Y1 - 2015/02/28 UR - https://pm-research.com/content/24/1/31.abstract N2 - Given the significant rally in stocks, high-yield bonds, and other “risky” assets such as REITs, commercial mortgage-backed securities, and asset-backed securities, the memory of 2008 may be fading in investors’ minds. However, with the Federal Reserve’s quantitative easing program nearing its end and the potential for a rise in short-term interest rates, these investments have become increasingly vulnerable to a significant downturn. Corporations are now generally experiencing stagnating profit margins and weak growth, and high-yield bonds have risen to a point where their spread over comparable Treasury securities is hovering at historical lows. Given these conditions, investors should think about decreasing their exposure to these risky assets. But what should be purchased with the funds? We provide insight into the current conditions in the financial markets that have made risky assets vulnerable for a pullback and suggest what assets should be purchased in their place.TOPICS: Fixed income and structured finance, risk management, portfolio construction ER -