Income Monitor: Q2 2019

The Global X Income Monitor for this quarter can be viewed here. This report seeks to provide broad, macro-level insights into the income characteristics of various asset classes and strategies.

Q2 was all about interest rates for income investments. Rates began plunging to levels we had not seen since the Fed began unwinding its quantitative easing policy. Expectations of multiple rate cuts in the second half of the year by the Fed led to a falling yield curve. Eventually, the Fed capitulated in July, cutting rates by 25 basis points.

With positive real yields being more challenging to come by these days, we think evaluating your income portfolio should be a priority. For international investors, the same challenges exist as central banks globally have followed the Fed’s lead and taken a more dovish stance.

The volatility in asset prices due to the trade wars makes investing in quality dividend payers an interesting alternative for investors. At a sector level, the downturn in oil prices has made the energy sector amongst the highest yielders. We believe an attractive option could be MLPs for income investors. Within fixed income, preferreds could be a solution for those looking for better credit quality relative to high yield bonds or corporate bonds.