Bonds are back has been a common refrain in financial markets for the last year or so and this sentiment has been validated by fixed income results. Global core bonds have delivered strong returns over the last 12 months, while global credit has been even higher.
These results may cause some investors to wonder whether they have missed the boat; has the opportunity in fixed income passed? To that, our answer is an emphatic no; in fact, we believe the opportunity is just getting started. The combination of high starting yields and a supportive macro backdrop means the stars could finally be aligning for fixed income markets.
Bonds now offer compelling investment opportunities alongside continued lower inflation and central banks entering the easing cycle. They are also once again providing diversification from equities, as highlighted by recent market volatility.