Portfolio Management:The Need For Income Now

We've transitioned to an emergency need for income,said Rick Rieder,Chief Investment Officer of Fundamental Fixed Income at BlackRock.Rates are gonna be low for a long time.To get any real income,you have to take risk at levels that are uncomfortable.
Central banks are crowding out investments at a record level.You create a portfolio rebalancing act that is profound.We live in a delevering world.You'll create bubbles like we had in prior decades if it goes on for too long.
Maybe there will be no tapering of Fed policy until 2014.Because you're distorting the interest rates so low and lengthening the portfolio,you're creating potential risk in the fixed income portfolio higher than in equities.Tactical short term,we've taken some interest rate exposure;longer term,loans and structured products without a lot of interest rate risks,such as CMBS,collateralised mortgaged-backed securities.
We think the growth of the real estate business has some real durability to it.People underestimate what a big deal it is.You have an environment of liquidity today.It's part of what will keep the real estate market in strong shape.
The delevering in Europe is gonna go on for years.
It's very hard to generate yield when the 10 year Treasury is at 1.50%,Mr.Rieder pointed out.Central bank policies are causing a haircut for investors,PIMCO co-CIO Bill Gross agreed.
People are excited about the equity market,yet anxious about the artificiality of central bank assistance,his colleague Mohamed El-Erian added.If these prices are not validated by data,they will look very artificial.
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Private Bank Views 2:Fixed Income Prospects

Asset prices are higher because the Federal Reserve is flooding the market with liquidity,said Michael Brandes,Global Head of Fixed Income Strategy at Citi Private Bank.We're still bullish on fixed income.We look at corporate bonds and mortgage-backed securities,or MBS,where we've seen very good returns.The fact that it's open ended is key.That creates the impact.
We do like dividend-paying stocks.The default risk is low and fundamentals are strong for high yield debt.MBS also offer some spread.
We are very cautious about Europe.There are a lot of concerns about the banking system and other risks on the continent.You want to be cautious about what you buy.
All this liquidity is going to help fundamentals.Fundamentals are still strong and demand is still strong.
Michael Brandes is on the Global Investment Committee at Citi Private Bank.He has a BA from the State University of New York and an MBA from Columbia University Graduate School of Business.

Global Money Manager:What You Have To Do

There is considerable concern about the fate of the European banking system in these troubled times.It's about deposits,and you're worried about deposit flight,according to Peter Fisher,Global Head of Fixed Income at BlackRock.It's a bigger issue than whether Greece leaves the euro currency.You want a banking system that's stable for Europe.You don't have to have a fiscal union;but not having a banking union,that's a problem. In a high volume,low liquidity environment,you have to bring your risk level down.You've got to be much more judicious.In the U.S.,I think Congress will not want a recession this year,and will pass a marginal measure;but will have a rude awakening in October,when the market reacts to the fiscal cliff.As a return play,you look at high quality corporates and fixed income,Mr.Fisher advised. BlackRock has offices in 27 countries worldwide.From governments to pension plans,insurance companies and individuals,the money management firm serves its diverse clientele with risk management,strategic advisory and investment system services,building portfolios totaling approximately 10 trillion dollars. BlackRock Inc.(BLK)