The OppenheimerFunds Income Strategy Playbook
The question of where to find income is a perennial one for investors. Our new Income Strategy Playbook is a curated guide to income investing that offers a barometer for the state of markets today, and builds a fundamental case for income asset classes. Produced by the Investment Strategy Team, the Playbook synthesizes the current views of OppenheimerFunds’ portfolio management teams to help investors understand the trends impacting income-producing asset classes.

Where Are the Income Opportunities Today?

The current credit cycle looks robust, and we believe the global economy will continue to expand into 2019. The Federal Reserve will maintain its current gradual tightening path, pushing short interest rates gradually higher. Outside the United States, a strong dollar and current attractive valuations resulting from negative flows make international, and especially emerging market, fixed income assets appealing today.

Against this backdrop, we still favor maintaining an overweight to credit over Treasuries, staying shorter on the duration spectrum,1 and looking outside the United States for income opportunities today. With real yields higher abroad and a strong fundamental backdrop, international and emerging market bonds emerge as our favorite income story for Q4 2018.

How Is the Playbook Designed?

Each section of the Playbook begins with an overall barometer of views like this one for investment-grade bonds:

Investment Grade Bond Views

Subsequent slides in the section provide supporting data and charts that help inform our opinions on the income asset class. These views typically reflect the opinions of the portfolio teams that specialize in these areas, which include investment-grade, international and emerging market, and high-yield corporate bonds, as well as dividend-paying equities and municipal bonds. For instance, here’s a view from our international bond section on market indicators:

International Bond Market Indicators

The Income Strategy Playbook leverages the expertise of OppenheimerFunds’ portfolio managers who bring together decades of experience evaluating and investing in markets, as well as the insight of our investment strategists. Read on to see the entire Income Strategy Playbook!

For analysis of opportunities in equity, view our Equity Strategy Playbook.

The Citi World Government Bond Index (WGBI) ex-USD is designed to measure the performance of sovereign bonds outside of the United States.

The JP Morgan EMBI Index is designed to measure the performance of hard currency (U.S. Dollar or Euro-denominated) international bonds.

The JPMorgan GBI-EM Global Diversified Index tracks total returns for local-currency-denominated money market instruments in the emerging markets.

The indices are unmanaged and cannot be purchased by investors. Index performance is shown for illustrative purposes only and does not predict or depict the performance of any particular investment.  Past performance does not guarantee future results.

 
  1. ^Duration measures interest rate sensitivity. The longer the duration, the greater the expected volatility as interest rates change.