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Fixed income

Positioning for the turning point

Where to position in a directionless market? Head of Fixed Income, Andrew Lake shares where he sees opportunities across the USD30 trillion bond universe.

Unprecedented market dynamics have left many scratching their heads about how to allocate to fixed income.

Summary

  • Relentless geopolitical uncertainty, combined with ongoing hope of a Federal Reserve pivot, is fuelling market volatility.
  • The notion of US Treasuries being a risk-free asset has become questionable, leaving fixed income investors scratching their heads as to how to allocate.
  • Some have retreated to cash due to the lack of market direction – we believe this approach will prove costly on a 12-month view.
  • In an investment universe totalling USD30 trillion, there are always options that outperform cash, the key is having the scope, flexibility and commitment to access them.
  • Investment grade corporates are one of the primary areas where we see opportunity.
  • The higher-quality end of the high yield spectrum also looks interesting; we are focusing on robust companies with strong balance sheets.

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