Investments

Returns and protection: an impossible combination?

Posted by MoneyController on 14.10.2022

Investors are going through a difficult phase: volatility in the markets remains above average and the outlook for economic growth is less and less promising. Many investors are looking for a solution that can maintain the right protection for their portfolios without sacrificing some search for return.

Where do investors look for some guarantee of return?

From the analysis of the experts of the investment company Amundi, it seems that certain types of securities can provide both some protection from fluctuations and some form of yield: these are certain bonds, 'value' and quality stocks, but also dividend-paying stocks. This analysis was also reported by the 'Financialounge' platform, in an article by Leo Campagna.

The economic environment remains unfavourable

One of the central aspects of Amundi's analysis is the outlook on corporate profits. Predicting them exactly is impossible. However, it is possible to predict a more general trend on the basis of economic data. The macroeconomic picture does not look very reassuring. Europe is affected by the energy crisis. The US is facing an economic slowdown. China has been hard hit by the property market crisis and the restrictive measures against the pandemic.

Quality bonds and credit risks

Against a backdrop of uncertainty, Amundi's experts assess the higher-quality bond segments with interest. On the one hand, they consider the valuations of ten-year US treasury bonds to be attractive; on the other hand, they view Investment Grade corporate bonds with equal interest. Investment Grade (or quality) bonds can in fact count on a certain balance sheet strength and resistance to price increases due to inflation. However, as interest rates rise, Amundi is paying attention to those investment sectors that are weaker on the credit side, such as high-yield bonds or private equity.

Value stocks, dividends and commodities

Following the same logic, Amundi favours value stocks and those that pay dividends to shareholders. Finally, Campagna's article also mentions the company's diversified approach to real assets, such as commodities and gold, an approach that also takes into account 'areas (...) that can provide inflation-adjusted returns'.

Read also:

What does Financial Investment Return mean?

Why does it make sense to diversify your investment portfolio?

What are bonds and how do they work?

Investing in shares: what are shares in a company?

TODAY’S MOST READ ARTICLES

MOST READ ARTICLES OF THE WEEK

18.06.2024 posted by MoneyController

Focus China: from Warren Buffett's moves on the property market to the hunger for offshore investment

Continue reading

MOST READ ARTICLES OF THE MONTH

MOST READ ARTICLES IN THE FINANCIAL FORUM

View classification