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PORTFOLIO PERSPECTIVES | – 2 Min

Talking heads – Carry is king after ‘annus horribilis’ in fixed income

In this article:

    While many bond investors have felt the earth move under the feet this year as the asset class experienced the finale of a 50-year bull market, the denouement has not stripped them of opportunities, Arnaud-Guilhem Lamy, head of euro aggregate bond management strategies, tells chief market strategist Daniel Morris.  

    Listen to this Talking heads podcast on the unprecedented selloff in fixed income markets which pushed yields on bonds and money market instruments into positive territory. While the pace of central bank rate rises has been steep, peak hawkishness has come into view as growth concerns and the risk of recession take over from inflation-busting.

    “Most of the rate hikes have been done,” Arnaud-Guilhem says as he highlights the appeal of low credit risk covered bonds, curve flattening strategies for non-German markets and attractively valued investment-grade corporate bonds.

    You can also listen and subscribe to Talking heads on YouTube and read the transcript.

    Disclaimer

    Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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