PGIM Short Duration High Yield Opportunities Fund raises $542 million
PGIM Investments has successfully completed the initial public offering of the PGIM Short Duration High Yield Opportunities Fund.
The U.S. economy continues to recover from the worst effects of the COVID-19 pandemic, but the pace of the rebound appears to be moderating. As the calendar flips to the final quarter of the year, investors who have already endured a host of significant challenges in 2020 are likely to face even more in the next several months.
In their latest market outlooks, PGIM’s asset managers look at how investors can navigate the ongoing turmoil and take advantage of opportunities that may result.
In their Q4 2020 Outlook & Review, QMA’s Global Multi-Asset Solutions team notes that as COVID-19 lockdowns were eased and restrictions loosened in the third quarter, there was a surge in economic growth. Nonetheless, there are already signs that the pace of global growth is losing momentum and that growth in the fourth quarter will inevitably be slower:
“Will governments around the world continue providing sufficient fiscal stimulus to support their economies, or will fatigue and complacency set in? More action is needed on that front, and the cost of letting up will be many times greater than the cost of continued support.”
Jennison Associates says that while the pandemic may continue to disrupt activity around the globe, they are optimistic that an effective vaccine is on the horizon. However, it may be 12-18 months before a finished product, a prerequisite for a broad-based recovery in confidence and activity, is available. Over the last several months, investors continued to demonstrate their preference for businesses that were thriving before COVID-19 and that have benefitted from pandemic-related tailwinds and enhanced competitive positions:
“In tumultuous environments such as the current pandemic, innovative technologies take root and typically gain significant market share. Given this dynamic, we believe technology-related stocks will extend their decade-long market leadership, supported by reasonable relative valuations that continue to be driven by the sector’s overall stronger ROEs and free cash flow generation, often as a result of innovative and disruptive product offerings.”
According to PGIM Real Estate, across global real estate markets, transaction volume has also slowed sharply and values are under pressure — notably in retail and hotels. As the fourth quarter unfolds, PGIM Real Estate is focused on the current environment and suggests that even though returns may be lower during a downturn, the benefits of diversification and effective asset allocation increase significantly:
“For portfolio construction, it is important to note that after three years, more than 50% of markets are likely to still be recording negative quarterly real value growth, so building exposure to recovering sectors and markets can generate significant outperformance.”
PGIM Fixed Income’s fourth-quarter outlook sees more uncertainty in the near term than in the long term, given the fraught U.S. elections, the unpredictable path of the coronavirus, and the effects from the flood of monetary and fiscal stimulus. For the fourth quarter, PGIM Fixed Income is carefully analyzing short-term scenarios while focusing on a more favorable credit-related environment going into 2021:
“The potential for volatility is clear. But the configuration of value, fundamentals, and fiscal and monetary policies leaves us relatively optimistic about the bond market outlook.”
For the latest market outlooks, webinars and summaries, visit PGIM’s market outlooks page.
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