Preferred themes e High quality dividend yields (sourced from existing European e Government bond alternatives (sourced from government bonds - and UK equities) clo UW) High quality companies with geographically diversified business Developed world government bonds offer a comparatively small cushion models that pay sustainable dividends offer an attractive income against future interest rate hikes and many face increasing credit risk. We stream in a low yield world. Historically, dividends have made a expect selected bonds of supranational or national agencies, sub-national substantial contribution to total returns, and we expect this to remain governments, multinational corporates, and covered bonds to outperform the case in the current environment. government bonds. We recommend switching out of government bonds e Western winners from emerging market growth (sourced from inte these alternatives. existing equity holdings) e US high yield corporate bonds (sourced from government bonds - Emerging economies continue to grow faster than developed clo UW) economies. With little need to deleverage and repair balance sheets, Positive economic growth, robust corporate earnings and healthy balance Asian economies are also well positioned to continue to outpace their sheets provide support to US high yield corporate bonds. Current yield Western peers in the years ahead. We have identified companies from spreads of 540 basis points still price in a more dire economic outcome a variety of sectors in Europe, the US and Japan which have significant than we expect. Historically, US high yield bonds have delivered similar exposure to the rapidly growing emerging regions. We believe a returns as US equities with lower volatility. We continue to believe that diversified portfolio of these companies will reward investors seeking US high yield corporate bonds represent a more favorable risk/return to profit from the robust demand growth in emerging economies. potential than equities