David Rosenberg of Gluskin Sheff catches a lot of flak over his macro bearish views, but he’s also offered some excellent insights over the last few years on micro positioning. In his latest note he says “cash is not king” and offers a few alternatives. His best idea in this section:
“the best advice I can give you is to search for sources of relatively secure income. This can mean select REITs – especially with the US residential rental vacancy rates edging down to a mere 4.6% and rental growth steady at roughly 1% per quarter (as per the latest Reis data). Yields on average have declined to 1.7% but that is still better, more than double, in fact, what you can garner at the mid-part of the Treasury curve. Intermediate Investment Grade bonds too are a happy medium between risky equity markets and safe treasuries – the average fund has generated a return of over 6% so far this year. With speculative grade corporate default rates well below average at around 3%, high yield bonds with an average coupon of over 6% are perfectly reasonable, especially given the strength in corporate balance sheets.”
Source: Gluskin Sheff
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