Investors will need to review their portfolios to prosper in a sustained low-yield environment
Global debt levels are rising and investors need to be prepared to reassess their portfolios to prosper in a sustained low-yield environment, according to the latest Deutsche Bank Wealth Management Chief Investment Office (CIO) Insights Special – Peak Debt.
Investors should reconsider risk and investment time horizons amid fears about the direction and side-effects of current monetary policy, Chief Investment Officer Christian Nolting wrote in the report, which looks at historical debt trends, the policy implications of rising debt and possible investment responses.
Rather than waiting for higher or positive returns in high-grade bonds, investors should instead see their merits as diversifiers – and look for yield elsewhere, he suggested. The case for real assets remains, with equity investments potentially offering a range of benefits, albeit with implications for risk and potential rewards.
Over recent years there has been a particularly fast rise in overall debt levels and, in some economies, private debt becoming public debt.
To reduce debt, lower interest rates and, thus debt servicing costs over the last decade could have been used. But still, they have encouraged many people to increase borrowing.