Nasdaq #TradeTalks: Income investing in 2021

HANDLS Indexes Co-Founder Matthew Patterson joined Jill Malandrino on Nasdaq #TradeTalks​ to discuss income investing and a vehicle designed for a predictable flow of income. To see the full interview please click here:#TradeTalks: Income investing and a vehicle designed for predictable flow of income | Nasdaq

Key Highlights:

2021 First Quarter Income Investing Recap

Interest rates took center stage in the first quarter of 2021, with the 10-year U.S. Treasury backing up from 0.93% on 12/31/2020 to 1.62% on 3/15/2020.

  • Bond investors pricing in expectations of economic growth driven by a Biden stimulus package.
  • Will this be the year the rising rates trade finally pays off?

The impact of rising interest rates on income investing asset categories.

  • Every fixed-income asset category tracked by the Nasdaq 7HANDL Index produced negative returns in the first quarter.
  • Sector shift in equities as expectations of increasing economic growth faceoff against higher discount rates associated with a steepening yield curve.
  • Established companies with near-term cash flows outperforming broader market.
  • High-growth companies underperforming as investors discount long-term cash flows at higher rates.

2021 Second Quarter Income Investing Outlook

Whither interest rates?

  • Goldman Sachs is predicting the 10-year U.S. Treasury to hit 1.91% by year end.

However:

  • Inflation expectations remain muted.
  • The rising rates trade is perhaps the most crowded, least successful trade of the last decade.

The Biden tax proposal would raise taxes on corporations and high-income individuals.

  • Higher corporate taxes would reduce after-tax returns on invested capital and put downward pressure on equity valuations.
  • The impact on fixed-income markets is unclear.
  • The likelihood of proposal passage questionable.

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Matt Patterson, co-founder Bryant Avenue Ventures, LLC
Matt Patterson, co-founder Bryant Avenue Ventures, LLC
Matt is a co-founder of Bryant Avenue Ventures LLC, the creator of the Nasdaq 7 HANDL Index. In 2017 Bryant Avenue Ventures partnered with Strategy Shares to launch a target distribution ETF. Matt previously co-founded and served as Head of Investment Strategy and General Counsel of Accretive Asset Management LLC, the creator of BulletShares Indexes. Matt began his legal career as an Associate in the Corporate Department of Skadden, Arps, Slate, Meagher & Flom LLP. Matt holds an MBA from the University of Chicago, a JD from the University of Illinois College of Law and a BA from the University of Illinois.

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