Yet as long as rates stay low, too many
investors reach for yield in ways that may be dangerous, he added..
Market Killer When rates are low,
investors reach for yield beyond what seems logical, according to a study outlined in The Wall Street Journal, which concluded that if rates rise and investors revert to less risky portfolios, equities could «be in for a big drop.»
In general, average retail
investors reach for yield at the wrong time, and Wall Street is more than happy to facilitate that through structured notes and other high yielding investments where the risk is greater than the excess yield.
The way to think about it is that
investors reached for yield at a time when stocks were in trouble, and indeed, rates went lower.
Unlike Bombardier, we think the ARD deal is a classic late cycle example of
investors reaching for yield without considering the downside risk.
Not exact matches
He says the actions of central banks «attempting to spark economic growth» are «severely punishing the world's savers and creating incentives to
reach for yield, pushing
investors into less liquid asset classes and increased levels of risk, with potentially dangerous financial and economic consequences.»
These benefits would (i) largely go to developers and contractors
for infrastructure projects like new pipelines that would happen even without new incentives and so be highly regressive; (ii) raise costs by failing to
reach the tax - free pension funds, sovereign wealth funds and international
investors who are the most plausible sources of incremental infrastructure finance; (iii) not encourage at all the highest return maintenance projects like fixing potholes that do not
yield a pecuniary return
for investors; and (iv) by offering credits at an unprecedented 82 percent rate, invite all kinds of tax shelter abuse.
The lower
for longer outlook
for Fed rates extends
investors»
reach for yield, and we see it further supporting EMs.
These benefits would (i) largely go to developers and contractors
for infrastructure projects like new pipelines that would happen even without new incentives and so be highly regressive; (ii) raise costs by failing to
reach the tax - free pension funds, sovereign wealth funds and international
investors that are the most plausible sources of incremental infrastructure finance; (iii) not encourage at all the highest return maintenance projects like fixing potholes that do not
yield a pecuniary return
for investors; and (iv) by offering credits at an unprecedented 82 per cent rate, invite all kinds of tax - shelter abuse.
This very low market volatility can lead
investors to take on more risk, and in a period of still relatively low interest rates, to «
reach for yield» — that is, buy riskier assets than one would otherwise, in order to achieve a desired profit or savings goal.
The
reach -
for -
yield stops when T - bill
yields drop so low that
investors are indifferent between zero - interest cash and low -
yielding Treasury bills.
Retirees and other
investors are
reaching farther and farther
for yield, piling into all sorts of increasingly risky investments.
Investors have
reached for yield without regard
for risk.
BlackRock has observed that a convergence of market and behavioral dynamics has caused many
investors to operate at the extremes as they seek income: They are taking undue risk in a
reach for yield and at the same time hoarding cash.
Investors seeking income have taken to the extremes:
reaching to the riskiest corners
for yield while also piling up cash.
Investors and fund managers search
for yield, extend maturities,
reach for lower credit quality and shift assets from short term floating rate money market funds to bonds, bond funds and similar investments.
There is an important lesson
for investors here:
reaching for yield can be risky.
When rates are very low, as they've been, some
investors «
reach for yield».
There are many
investors that are
reaching for yield in this environment, and I think they will eventually get burned.
And in this search
for higher
yields, we find
investors are
reaching deeper and deeper into lower - grade fixed - income products, which come with significant credit and interest rate risks,» says Som Seif, president and CEO of Purpose Investments, through a statement.
While most income
investors are
reaching for big
yields right now, a small group of «hidden
yield» stocks are quietly handing smart
investors growin....
Cerulli explains that the interest rate situation since the financial crisis «has pushed institutional fixed - income
investors of all stripes to
reach for yield to meet investment goals.»
In today's low
yield environment, some
investors go off course because they've become too intently focused on
reaching for income.
We think one of the biggest mistakes that a lot of dividend
investors make is
reaching for yield.
Preferred shares have become popular in today's low interest rate environment as
investors reach for higher
yield.
Too often
investors reach for the higher
yield without understanding the risks involved.
If avoiding a painful recession requires zero or negative interest rates that juice up asset prices and force
investors — through financial repression — to
reach for yield and take more risk than they should, then — so the wisdom of today's central bankers» goes — so be it.
Some
investors are
reaching for yield in risky places.
a. Preamble — The individual
investor has been
reaching for yield, unwisely using past performance as a guide to future success, and therefore believing that bonds are the best investment
for 2013.
For example, investors or portfolio managers dissatisfied with low returns may reach for yield by taking on more credit risk, duration risk, or levera
For example,
investors or portfolio managers dissatisfied with low returns may
reach for yield by taking on more credit risk, duration risk, or levera
for yield by taking on more credit risk, duration risk, or leverage.
«With the increased demand
for net lease,
investors have been
reaching for additional
yield that franchisee properties provide,» Blankstein says.
Commercial property deals in Canada
reached a record
for a second consecutive year and show no signs of slowing as
investors continue seeking high -
yield assets in a haven from global turmoil, according to CBRE Group Inc..