May 25, 2016 / 7:31 PM / a year ago

CORRECTED-BRIEF-BlackRock strategist says VIX should rise to low-to mid-20s by fall (May 25)

(In May 25 brief, corrects fifth bullet to say "financial market conditions are still tighter", not "financial market spreads still tighter")

May 25 (Reuters) - BlackRock strategist Russ Koesterich says:

** Investors expect VIX volatility index to rise to about 20 by fall but this may understate potential rise in volatility

** "Better return-to-risk ratios are in high yield bonds, EM dollar-denominated debt and bank loans"

** International stocks also attractive relative to domestic ones, thanks to lower valuations, higher dividend yields

** A potential asset class that scores well on expected yield relative to expected risk is preferred stocks

** Financial market conditions are still considerably tighter than two years ago. This suggests that volatility should rise back into the low to mid-20s

** Emerging markets likely to perform better thanks to much lower valuations, they however come with considerably more risk

Source text: (bit.ly/1TAgCrx) (Bengaluru Newsroom: +1-646-223-8780)

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