1 Jun 2016

While bonds can serve as a foundation for a well-diversified portfolio, they also play a critical role during market uncertainty. Diversifying your bond approach (supported by active investment expertise) can help you manage interest rate uncertainty and uncover untapped sources of return.

Finding yield will remain difficult in 2016. The shortage of high quality fixed income coupled with ongoing low global rates means yield-hunting and managing volatility will remain a key activity for investors.

In recent years, fewer and fewer fixed income assets are yielding over 4%. Investors need to be selective in selecting their fixed income investments. Consider an allocation to investment grade corporates with strong balance sheets and good credit ratings, or look to investments with relatively attractive values with upside potential such as Asian Credit. Alternatively, investors with greater risk appetite can seek higher yields in high-yield bonds, or look to emerging market sovereign debt.

 

Fixed income indices yield

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