After years of safely reaching for yield through risky assets like stocks and speculative-grade bonds, Wall Street is heading into 2016 rethinking the strategy.
Most market pros who have weighed in with year-ahead forecasts so far see equities posting anywhere from a flat year to modest gains. There is, however, sharper disagreement over high-yield bonds, which often are seen as an effective proxy for stock market behavior.
Fixed income experts worry that the appetite for risk in a low-rate environment is about to become more dangerous. As a result, they’re telling clients to adjust their behavior.
“How do we get our investors to unreach for yield?” Darrell Cronk, president of the Wells Fargo Investment Institute and the firm’s chief investment officer of wealth and investment management, said at a media briefing earlier this week.
