Exploiting volatility in the age of low rates

The US economy grew at a 6.4% pace in 1H 2021 and added 4.3 million jobs in the year-to-date. A record 9.2 million job openings remain to be filled.  Despite growth momentum and a near-term spike in inflation, even the longest-term US government bond yields remain below 2%. Globally, nearly $17 trillion USD-equivalent of bonds have negative yields, even before accounting for inflation. 

Some central banks continue to purchase bonds and may continue to do so for years to come. As a result, we believe that current yields are insufficient to reach almost any portfolio income goal.   But given that realized equity market volatility has averaged less than implied volatility for more than a decade, there are strategies to gain exposure to equities OR achieve an enhanced yield that may improve portfolios in a “yield repressed” world.