How Can Income Investors Tackle Higher Inflation

UBS advises income investors to diversify into inflation-linked bonds, Swiss/SE Asian dividend equities, and alternative assets like infrastructure to tackle sticky inflation. This multi-asset approach aims to protect purchasing power and enhance yields amidst Middle East oil disruptions and rising US PCE inflation.

Key Takeaways

• 1.Income investors should diversify across bonds, equity income, and alternatives to mitigate the risk of eroding purchasing power from sticky inflation.
• 2.A combination of investment-grade, select high-yield, and emerging market debt can enhance yields while managing credit and currency risks.
• 3.Equity income strategies in Switzerland and Southeast Asia are preferred, potentially combined with systematic option-selling to enhance yields.

Table of Contents

• Key message
• 01 Diversified fixed income can enhance yields and spread risks.
• 02 Investors can also consider equity income approaches.
• 03 Longer-term investors may consider exposure to alternatives.
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