Tags: BlackRock | investment | strategies | volatility

BlackRock: 5 Investment Strategies for a Rocky 2016

BlackRock: 5 Investment Strategies for a Rocky 2016

By    |   Wednesday, 06 January 2016 08:00 AM

Stocks started the year with the worst opening day since 2001 when the S&P 500 was in year two of a three-year collapse.

Monday’s 1.5 percent decline has some investors worried about more pain ahead as the global economy shows signs of weakening  and the Federal Reserve appears intent on raising interest rates throughout the year.

Russ Koesterich, chief investment strategist at BlackRock Inc., has several ideas for investors to consider this year.

“Following many years of rising valuations on the back of aggressive monetary policy, I believe the market returns are likely to be more muted in 2016,” he writes in a Seeking Alpha blog. “At the same time, given rising geopolitical uncertainty, the markets look sure to be more temperamental after years of relative calm.”

Five Ideas for 2016

Look Abroad   
“Outside of the U.S., stock prices look more attractive. I particularly like Europe and Japan, where valuations are more compelling and central banks are still delivering market-friendly monetary easing.”

Consider Hedging Currency Exposure In International Markets
“Monetary policy divergence points to a strong dollar and weaker euro, meaning it may make sense to hedge international currency exposure.”

Be More Active
“Investors could benefit from looking to active managers to source some of their returns. Low volatility and strong returns benefited indexers the last six years, as active managers generally lagged their benchmarks. But higher volatility also means greater dispersion in security returns, creating a better opportunity set for skilled active managers.”

Go for an Unconstrained Income Strategy

“Income will remain a hot commodity in 2016, as interest rates are likely to stay low even as the Fed hikes and other income sources also face hurdles. In this environment, generating ample income will require more than a single asset type as well as a careful balance of yield and risk.”

Diversify With Long-Term Bonds
“I prefer Treasury Inflation Protected Securities (TIPS) to plain-vanilla Treasuries. Deflated inflation expectations seem like an anomaly, unless you expect oil prices to free fall forever. This makes TIPS look relatively attractive,” he writes.

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Stocks started the year with the worst opening day since 2001 when the S&P 500 was in year two of a three-year collapse. Russ Koesterich, chief investment strategist at BlackRock Inc., has several ideas for investors to consider this year.
BlackRock, investment, strategies, volatility
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2016-00-06
Wednesday, 06 January 2016 08:00 AM
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