PGIM CEO Hunt: Expectations for Returns Need to Come Down

The video discusses the risks associated with investing in emerging markets, emphasizing the need for investors to adjust their return expectations. It highlights the limited effectiveness of negative interest rates, particularly in aging economies, and the necessity for structural reforms in Japan to stimulate growth. The video also examines the dynamics of the equity market, driven by attractive dividend yields compared to bonds, rather than strong fundamentals.

What is a major risk when investing in emerging market debt?

• Guaranteed high returns

• Stable returns with no risk

• Lower risk compared to developed markets

• Higher risk with potential for high returns

Why might negative interest rates be less effective in economies with aging populations?

• They guarantee economic growth

• They increase savings rates

• They ensure higher monthly mortgage payments

• They decrease the need for structural reforms

What is necessary alongside monetary policy to stimulate growth in Japan?

• Increased ETF purchases

• More accommodative monetary policy

• Structural reforms

• Higher interest rates

Why are investors moving money from bonds to equities?

• Bonds offer higher returns

• Bonds are more volatile

• Equities have lower risk

• Equities have attractive dividend yields

What has driven stock markets higher despite stretched valuations?

• Strong economic fundamentals

• Lack of fixed income alternatives

• Decreasing dividend yields

• Increased bond yields