Redefining Risk 

 
Learn the history of financial repression and how it impacts financial markets.
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Low Risk Chart
Seeking ‘Safe Havens’ Risks Income Shortage
Cash and benchmark bonds aren't delivering the income investors need in the face of financial repression. To earn income and outpace inflation, consider stocks and high-yield bonds.

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Low Risk Chart
Income Shortage: Why Low-Risk Assets Won't Cut It
This investor-approved chart shows the asset-class investment levels needed to generate $100,000 in income at different points in time.

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How Did We Get Here?
All around the world, economic growth has slowed while government debt has ballooned to unsustainably high levels. In the US, for example, debt is expected to increase to more than 114% of gross domestic product (GDP) by 2017, according to the International Monetary Fund. This exceeds the critical debt-to-GDP threshold of 90%, above which debt appears to create a significant drag on growth.

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What is Financial Repression?
Financial repression has historically involved a number of government actions to reduce debt—including lowering interest rates, increasing regulations and restricting capital movements—all while maintaining inflation. The goal is to create negative real (after-inflation) returns and inflate away public debt by forcing real rates below GDP growth.

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Four Financial Repression Headwinds Affecting Investors
We’ve identified four factors that are working against investors in the current climate of financial repression. Some, like investors’ own fears, are within their control. Others, like low yields and inflation, require out-of-thebox thinking. But overcoming all four headwinds requires guidance from a trusted financial advisor.

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Allianz Global Investors Distributors LLC, 1633 Broadway, New York NY, 10019-7585, us.allianzgi.com, 1-800-926-4456.

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