What is next for Fixed Income Investments?

This was an Advisors Money Show panel discussion which included Portfolio managers from PIMCO, Loomis Sayles, and Wells Fargo...

As a result of Qualitative Easing 2 (QE2), low interest rates have been extended for the foreseeable future. The goal of this Federal Reserve strategy is to move money from low paying "safe" assets like savings accounts and money markets back into circulation and investments.

• High Yield Bonds (non-investment grade) and Corporate Bonds are paying better than U.S. Treasury Bonds. The default rate on non-investment grade bonds is now less than 1%.

With so much money still sitting on the sidelines, stocks are cheap. And because corporations trimmed away fat during the recession, they are cash rich and the risk to investing in them reduced.

• Energy companies and oil service companies look especially attractive as those stock prices are undervalued and expected to resume significant positive growth once the global economy gets fully underway.

Presently the economy is on a sustainable 2-3% growth. Inflation is level at less than 2% but is expected to increased to 2-2 1/2% levels by 2012-2013.

If you can stand volatility, a 10-20% position in Emerging Markets could prove to be a very profitable investment.