Allianz Investment: Seizing the growth in the US market, consider adopting a diversified asset strategy

According to the financial news app Zhitong Finance, Allianz Investment stated in a post that in terms of macroeconomics, the decline in inflation and cooling of the job market in the United States are creating room for the Federal Reserve to cut interest rates. The market consensus is that there is a chance for one to two interest rate cuts by the authorities in the second half of this year. The loosening of U.S. credit conditions from tight to loose is good news for various risk assets, especially as many investors in recent years have chosen to keep cash in banks. If the U.S. starts cutting interest rates in the second half of the year, the yield on bank time deposits will decrease. Therefore, it is time for investors to make good use of their cash on hand to seek more attractive investment returns.

However, in recent years, the rise in the U.S. stock market has been mainly driven by a few stocks. For example, as of the first half of this year, the S&P 500 index has achieved a return of about 15% and repeatedly hit historical highs, but much of the contribution comes from several tech giants. Additionally, with the upcoming U.S. presidential election at the end of the year, the recent attack on one of the presidential candidates, Trump, has added volatility to the market.

If investors wish to grasp the growth story of the U.S./Canadian market while also being concerned about high market volatility, they may consider adopting a diversified asset strategy.

Stocks: The latest economic data triggering market fluctuations, but with no major changes in corporate fundamentals, the economy is still expected to have a soft landing. Investors will closely monitor the direction of economic data and the trend of the election. Through covered call option strategies, investors can hold long positions in individual stocks while selling call options on related stocks to earn the option premium paid by the buyer, helping investors enjoy the growth potential of the U.S./Canadian stock market in a diversified manner. When the market experiences volatility, active investors can take advantage of better prices to acquire quality stocks.

Convertible Bonds: Convertible bonds can provide asymmetric return conditions. In simple terms, if the stock market experiences volatility, convertible bonds, with their attractive yield, can add defensive power to the portfolio; and if the stock price linked to convertible bonds rises, investors can participate in the trend.

High-Yield Bonds: The issuance of high-yield bonds in the U.S. has been increasing recently, reflecting ample market financing channels. Moreover, the U.S. economy remains quite healthy, with low unemployment and corporate default rates, historically indicating good results for investors in such an environment. In fact, due to interest rates still being at multi-year highs, the returns on U.S. high-yield bonds in recent years have been quite attractive.

Global Investment-Grade Bonds: Due to the current high coupon rates, coupled with the stable fundamentals of global corporations and low default risks, investing in high-quality bonds is expected to bring decent returns. Furthermore, the trading prices of many global investment-grade corporate bonds are below par, which can help provide downside protection.

Historical data shows that under different market conditions, various asset classes will perform differently: in some years, global stocks outperform, while in other years, global convertible bonds or global high-yield corporate bonds take the lead.

A globally diversified investment portfolio across various assets helps investors seek profit opportunities and create potential for capital appreciation, while also having lower sensitivity to interest rates, making it more capable of navigating complex investment situations. In addition, investing in asset classes with low correlation to each other can also reduce portfolio volatility, achieving a balance between offense and defense