Record-high inflation and rising interest rates are just the latest signs of an economy that is threatening to fall into recession, according to four investment experts speaking at a Nuveen-hosted roundtable on Tuesday.
Experts were divided on whether recession will happen. The result has been significant volatility in the stock market and investment portfolios.
While they expressed caution about the coming months, Nuveen's panelists offered some optimism that there is potential in several investment spaces.
“We’re not finding one asset class opportunity that is severely mispriced or offering a slam dunk kind of investment entry point,” said Anders Persson, chief investment officer and head of Global Fixed income at Nuveen. “It’s not a market where you can go all in on a particular asset class.”
He predicted that the income and carry type of investments will drive returns for the rest of the year. Other areas of opportunity include high yield investment vehicles such as leveraged loans or investments in the energy space.
One area that Persson said is particularly overlooked by investors is mortgage-backed securities. With mortgage rates increasing and limited supply, the pressure for pre-payments is significant.
“If you know what to look for there are opportunities,” Persson said. “There are opportunities in virtually every asset class.”
There are also opportunities in the environmental, social and corporate governance (ESG) sector, said Steve Liberatore, head of ESG and impact for Global Fixed Income at Nuveen.
“We’re trying to address the ability to direct capital in a way to reduce the cost of capital for a certain project, pools of assets, and technology that allow for a continued increase in the sustainability of the overall global economy,” he said.
Investments in solar are huge because it is a misunderstood and under-reported market, said Liberatore. Other areas include investments that have positive impacts on local economies.