Investors are moving into riskier assets they wouldn't have previously considered as low rates make yield scarce, a BlackRock strategy chief says
- BlackRock's Isabelle Mateos y Lago told Bloomberg on Wednesday that low interest rates are pushing investors in search of yield to riskier assets than they would have previously considered.
- The strategy chief sees investors moving into illiquid and alternative investments, and "these are investments that they would have never contemplated historically, because of their risk parameters."
- Traditional safe haven assets no longer provide a portfolio with yield or resiliency, Mateos y Lago said.
Low-interest rates are causing investors to buy riskier assets than they normally would seek out, according to BlackRock's Isabelle Mateos y Lago.
The global head of BlackRock's official institutions group told Bloomberg on Wednesday, "Portfolio construction is being completely taken back to the drawing board because people understand we'll face these low interest rates for a long, long time into the future."
Mateos y Lago said she's seeing global investors and asset owners move away from traditional safe-haven assets and into riskier ones like illiquid investments, alternative investments, high-yield bonds, and emerging markets bonds, particularly from China.
These assets are providing yield, but "for a lot of asset owners, these are investments that they would have never contemplated historically, because of their risk parameters."
Traditional safe-haven assets no longer provide a portfolio with yield or resiliency, she added.
"You obviously always need some safe government bonds in a portfolio, but the notion that they're going to play as big a role as they did in the past when rates were much higher and you had both yield and protection — that idea is fanciful," the strategy chief said.