Investors can expect equity-like returns from the corporate bond market for much less risk than stocks for the foreseeable future as interest rates in the U.S. stay elevated, said veteran investor Howard Marks, co-founder and co-chair of Oaktree Capital Management.
Going forward, the fed-funds rates are likely to be lower than where they are today, but they’re unlikely to be as low as they were from 2009 to 2021, said Marks. The fed-funds rates are likely to stay in the range of 2% to 4% in the coming years, instead of 0% to 2%, Marks said. From 2009 to 2021, the ultralow-interest-rate environment was ideal for asset owners, borrowers and leveraged buyers. However, “strategies that were the best performers in that environment should not be counted on to be the best performers in the new environment,” Marks said.