LEWIS AUBREY-JOHNSON – FIXED INCOME FUND MANAGER
In this update, Lewis Aubrey Johnson recaps the key insights shared by our fixed income fund managers during the recent webinar. Credit remains tight for our investment-grade and unconstrained strategies. However, we see opportunities to enhance credit quality due to the low opportunity cost.
Additionally, the current market environment offers intriguing opportunities to adjust duration as yields fluctuate. For more in-depth insights from our webinar, click below:
00:00:02:26 - 00:00:26:23
Speaker 1
Well, thank you for those who joined us for our fixed income webinar today featuring three of our fund managers. For me, the first key message that came out of it is that credit is now really pretty tight and that in our investment grade, an unconstrained strategy is where we're using it as an opportunity to improve the credit quality given the relatively low opportunity cost.
00:00:26:25 - 00:00:56:06
Speaker 1
Second, although valuations in high yield are also rich, there's always more dispersion. And we enjoy hunting around for issuers, where perhaps the yield might be higher due to certain challenges with the credit. Overall, though, we're keeping the credit risk relatively low and we just need to be a little bit patient. The third and perhaps more pertinent point is that duration is definitely where the action is at at the moment.
00:00:56:09 - 00:01:28:02
Speaker 1
Now, that's not to say that durations are one way, but I think far from it. Inflation is sticky. The fed has paused its cutting cycle and the macro is volatile to say the least. But the market is giving you chances to adjust the duration as yields move around. I mean, just look at how sentiment towards the US has changed, since the election of Trump, from the initial euphoria around the potential for for deregulation to now concerns that the policy uncertainty is actually starting to knock business confidence.
00:01:28:05 - 00:01:32:15
Speaker 1
Anyway, I hope you found the webinar useful and you'll find the replay on the website.
Each month brings a new, easily digestible instalment. Catch up on previous episodes below.
10-year gilt yields are now touching levels last achieved in 2008, during the global financial crisis. The UK gilt market is experiencing a range of challenges, a large fiscal deficit, tentative inflation, rising UK and global bond yields and more. In this month's edition of Bitesized Bonds, Lewis Aubrey-Johnson discusses these recent market events in 90 seconds. Click below to watch.
After a difficult patch over the last 3 years, the bond market has evolved. Higher yields, steady inflation and a changing economic environment has created a softer Macro picture. This warrants caution but it could be an interesting time to take another look at bonds.
There has been a decline in fund and government bond yields. The US bond yields have fallen further in August. How have recent events in the market contributed to this? We will be watching the markets carefully and responding as we go.
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Views and opinions are based on current market conditions and are subject to change.
This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.
EMEA 4277630
