Despite geopolitical risks and market uncertainty, there are still plenty of opportunities to look out for across the financial landscape. In fact, global investment opportunities are looking attractive especially in Europe and it’s just the beginning. On the domestic front, real estate investment trust opportunities in the South have become more appealing and when it comes to different sectors in the bond market - specifically agency mortgaged backed securities—the attractive valuations are certainly something for investors to consider.  

When it comes to global investments, Aram Babikian, head of XTrackers Wealth U.S. Onshore at DWS, says this is just the beginning especially when it comes to  Europe. He says, “What Germany has put forth recently, and they haven't even started spending yet, is 1 trillion, trillion dollar stimulus package. Now that is in infrastructure that is in defense spending. But in order to do that, there were changes that needed to be made to the Constitution. There were changes that needed to be made for, debt ratios and so forth. This hasn't been done before, if I'm not mistaken, since 1945. So when changes like that occur and the reverberation of such a stimulus package, it's going to go throughout Europe. Germany is the number one economy in all of Europe, and $1 trillion into a $4 trillion GDP is similar to $6 trillion into a $24 trillion GDP here in the U.S.. So when that occurs, you're going to see that, reverberate throughout. And that's going to affect a lot of things. Then you also have sort of the, changing dynamics that's been brought about with this current presidency. And this president has forced a lot of these countries to look within themselves. So you're combining now you have the first umbrella, which is the stimulus package, but then you also had a value play. Europe is still trading anywhere from 30 to 40% PE discounts relative to the U.S.. So when you have investment into an area with these kind of valuations, it looks very attractive.”

Meanwhile, Brian Sedrish, CEO of TCG Real Estate believes REIT opportunities in the south are the most exciting due to the migration patterns. He adds “ Covid may not have been a change agent, but it certainly was an accelerant. And what that did is brought so much migration down to the southern United States. And that includes encompasses called Texas, east of Florida, up North Virginia, and sort of southwest back down the migration. Real estate opportunities occur based upon demand from corporations. Lot of groups moving here. The Wall Street, the South Florida has been called and from population growth. And that's what moved forward the opportunity to invest in real estate.”

In addition, Dan Ivascyn, PIMCO's Group, CIO, and a member of our Executive and Investment Committees goes into specifics when it comes to the bond market. He says “Agency mortgage backed securities are an example of a high quality asset that offers attractive yields, that offers the ability to trade across different maturities different coupons within the sector to generate additional incremental return. And a sector that would be quite resilient relative to other forms of more economically sensitive corporate credit type exposure, if we ever got into a harder landing scenario. So I know that there's some uncertainty around, the Trump administration's approach to the agencies.  There's some tail risks around privatization of the agencies. We don't expect that in the base case. And when you look at agency spreads today, it's very rare that agency mortgage backed security spreads that benefit from a strong implicit government guarantee are wider than investment grade corporate spreads. And that's been the case over the last few years. Part of that's been the fact that interest rate volatility's been elevated relative to equity or credit volatility. Part of that's been the fact that the US central bank's been reducing risk. And we think again, there's just attractive valuations there, even if you were to have scenarios where the administration looks to privatize these agencies.”

All in all, there seems to be something for everyone out there. 

Author: Asset TV
Source: Top Picks: Seizing Specific Opportunities