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ERROR: type should be string, got "https://www.barrons.com/articles/4-themes-for-todays-income-environment-1437407643\nSponsored Content: J.P. Morgan\n4 Themes for Today’s Income Environment\nMichael Schoenhaut, Portfolio Manager, JPMorgan Income Builder Fund, Multi-Asset Solutions\nHow do I invest for income in the current rate environment?\nThe longer the Federal Reserve (Fed) continues its near zero interest rate policy, the more important it is for investors to ask themselves this question. That is because yields on traditional income sources have been lackluster for years (see chart below)\nWhat’s more, even when the Fed completes its next rate hiking cycle (we expect the first liftoff before the end of this year) rates are expected to be lower than in prior cycles. Consider: Over the past three cycles, the Fed began hiking when the fed funds rate was an average 2.9% and ended when rates averaged 5.9%. The Fed’s current projections point to just a 2.9% policy rate at the end of 2017.\nIn addition to global monetary policy, the situation in Europe has consumed recent headlines. On July 1st, Greece became the first advanced country to default on a loan from the International Monetary Fund. Global equity and fixed income markets have exhibited increased volatility as negotiations between Greece and its creditors dragged on during the past couple of months. While a deal has been reached, we are still not out of the woods. Despite the recent turmoil, we believe fundamentals in the region remain positive. In this environment of heightened volatility, investors require a nimble approach deployed across a global opportunity set.\nA compelling income strategy begins with a thorough analysis of a security’s yield, risk and return characteristics. Four key themes are reflected in our income-oriented portfolios today:\n1. We prefer dividend-paying equities from developed markets: We expect growth in developed economies to strengthen during the remainder of 2015. The U.S. economy, the global growth leader, is moving into a mid-cycle phase, with growth modestly above trend but with price and wage inflation contained. Assuming their central banks maintain aggressive monetary stimulus, Europe and Japan should both narrow their growth gaps relative to the U.S. We have tilted towards European equities as one of our highest conviction investment ideas, given attractive yields, decent valuations and an accommodative European Central Bank. In a customized allocation, we are capturing an average dividend yield approaching 4.5%. We look for a diversified mix of shares that can offer sustainable risk-adjusted income, rather than simply picking the highest yielding names.\n2. We maintain a measured exposure to high yield: Despite weakness in some commodity driven sectors, we believe fundamentals in the asset class remain favorable. The Barclays Capital U.S. Corporate High Yield Index yields close to 6.5% and default rates are expected to be in the 2%-3% range over the remainder of 2015, comfortably below a long-term average of about 4%. These positive fundamentals have led us to maintain a sizeable portfolio weight to high yield, albeit toward the lower end of the weights we have historically held.\n3. Opportunistic allocations express a positive view of U.S. economy: We continue to seek income from opportunistic allocations such as non-agency mortgages and preferred equities. These exposures are predominantly U.S. focused and offer impressive yields. Non-agency mortgages, which are predominantly residential mortgage securities not insured by governmental agencies, provide low duration sensitivity and no exposure to the energy sector. These attributes have led the allocation to be both additive and diversifying to other portfolio positions. U.S. financials comprise the majority of our preferred equities allocation, offering compelling yields and a higher place in the capital structure than common equities.\n4. The U.S. dollar is our preferred currency: Currency volatility has buffeted global markets during the past year. Central bank stimulus in Europe and Japan has led to downward pressure on the euro and yen relative to the U.S. dollar. Higher growth in the U.S. has also supported the USD. As we continue to seek out the best income opportunities globally, we look to manage foreign currency risk by hedging some of this foreign currency exposure.\nInvestment implication\nTraditional sources of income will be hard to come by, even after the Fed is well into its next rate hiking cycle. More than ever, the search for income requires investment flexibility beyond traditional capital structures, asset classes and regions. Investors will be well-served by a dynamic pursuit of yield, with a focus on downside protection and a global multi-asset class opportunity set.\nVisit jpmorganfunds.com/income-builder to learn how to find income for your clients’ portfolios in today’s rate environment."