Wells Fargo says investors need to prioritize income. Where it sees opportunity

In this uncertain world, investors should prioritize income in their portfolios, according to Wells Fargo Investment Institute. Interest rates are expected to remain higher for longer as inflation this year shows signs of picking up. The Federal Reserve isn't expected to reduce its federal funds rate when its June meeting concludes Wednesday and the market isn't anticipating any further cuts this year. Investors have to balance that backdrop with potential risks ahead, Darrell Cronk, president of Wells Fargo Investment Institute and chief investment officer for Wealth and Investment Management, said in the bank's midyear outlook. Prioritizing income is one of several investment ideas he laid out for the rest of the year. "Although investors are now able to lock in higher yields than we've seen in decades, today's economic backdrop brings key risks that include inflation, income replacement (i.e., replacing maturing bonds with new assets paying similar interest rates), and stock market concentration with high-level uncertainty as markets digest the effects of the U.S.-Iran war and accompanying high oil prices, a new Fed chairman, and an upcoming mid-year election that may have impacts on fiscal policy, both before and after the election," Cronk wrote. Various assets Therefore, income should come from a variety of assets, Cronk and his team believe. "Building an income-focused portfolio isn't just about building a laddered bond portfolio anymore. …