For bond markets, a heavy debt burden is among prominent risk factors
July 21, 2016
Risk management is at the forefront of everything we do for investors, from assessing current conditions for fixed income assets, to making risk-aware investment decisions. We aim to maintain portfolios balanced enough to cope with today’s unique sources of market stress. In the following slides, we examine several sources of such stress, focusing on risks such as those related to the high levels of debt accumulation around the world.
Taken together, these slides offer a snapshot of The Great Risk Rebalance series, which explores key risks facing fixed income markets today.
1The Core PCE price index measures changes in the prices that consumers pay for goods and services. The index is based on price activity within major areas of consumption, such as durable goods, recreational goods, and nondurable goods (examples of which include clothing, healthcare, and household supplies). To remove two notable sources of volatility (and thereby reveal a clearer picture of underlying inflation trends), the Core PCE index excludes the effects of changes in food and energy prices.
The MSCI EAFE Index measures equity market performance across developed market countries in Europe, Australasia, and the Far East.
The MSCI Emerging Markets Index measures equity market performance across emerging market countries worldwide. Index "gross" return approximates the maximum possible dividend reinvestment.
Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.
Charts are for illustrative purposes only.
The views expressed represent the Manager's assessment of the market environment as of July 2016, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Views are subject to change without notice and may not reflect the Manager's views.
Carefully consider the Funds' investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Funds' prospectuses and their summary prospectuses, which may be obtained by visiting delawarefunds.com/literature or calling 800 362-7500. Investors should read the prospectuses and the summary prospectuses carefully before investing.
IMPORTANT RISK CONSIDERATIONS
Investing involves risk, including the possible loss of principal.
Past performance does not guarantee future results.
Fixed income securities (including asset-backed notes such as mortgage-backed securities) can lose value, and investors can lose principal, as interest rates rise. These types of securities may also be affected by economic conditions that hinder an issuer’s ability to make interest and principal payments on the debt.
Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume.
International investments entail risks not ordinarily associated with US investments including fluctuation in currency values, differences in accounting principles, or economic or political instability in other nations.