Quarterly Investment Review: Q1 2021
On the investment front, the ongoing challenge to insurers/risk pools remains relatively low “nominal” yields and negative “real” yields across much of the investment-grade fixed income markets for the foreseeable future.
Bond yields rose (prices fell) markedly in Q1 amid the swift continued rollout of Covid-19 vaccinations, expectations of a large US economic stimulus, and the specter of inflation. Corporate bonds outperformed government bonds. Investment grade made negative total returns, the US dollar market particularly, as yields rose. High yield produced moderate positive returns amid healthy risk appetite and rising growth expectations.
On the equity side, one consideration remains clear – the strong equity market performance has most likely tipped your organizations’ asset allocations out of alignment. If that’s so, then a rebalancing discussion and/or actions is warranted.
Looking Ahead of 2021/2022: COVID-19 Containment vs. The Economy Recovery expectations continue to remain vaccination-dependent for 2021/2022 and will be uneven across states and industry sectors.