Thomas De fauw

2023 was a year that high-yield bond investors won’t soon forget. It was a period marked by a spirited comeback, with global high-yield bonds extending their rally, clocking a 3.1% gain in Q4 and culminating in a robust 9.6% total return for the year, as per the ICE BofA Global High Yield Constrained Index.

The 60/40 portfolio has been besieged on all sides since bonds failed to protect against the correction in equities last year. Many see salvation in alternative assets, while others preach flexible allocation. 

Despite the veritable stock market crash in Vietnam last year, Southeast Asian equities kept their heads above water. This was mainly due to the positive performance of Thai and Indonesian stocks. For future performance, eyes are on the direction of the dollar, the positioning of global investors, as well as the global economic outlook.

For investors in listed real estate who are deeply concerned about growth slowdowns and increased financing costs, 2022 is a year that will not soon be forgotten. For this week’s Top-5, we look at the best-performing global real estate funds in 2022. 

After a dramatic first half of the year where global high-yield bond funds lost 7.3 per cent of their value, the second half of last year saw a small gain of 1.4 per cent, in euro terms. The consensus among fund managers remains that despite recession fears, we will not see a wave of defaults in 2023 either. 

For this week’s Morningstar Top 5, we look at the best-performing funds investing in emerging market local currency bonds. These funds ended 2022 with a loss of 9.9 per cent, measured in dollars, or 4 per cent in euros. The outlook for this risky asset class does not seem favourable at first glance, although some fund managers say there are opportunities.

European investors this year found safety in short-term US debt and the dollar. This week’s Top 5 by Morningstar takes a look at the performance of US government bond funds in the year to date.

High-yield bonds are not equal. In the US market this year, the difference in spreads between bonds with credit ratings of CCC and below versus BBs rose from 4.6 percent to 9 percent.

After two consecutive red quarters, global high-yield bond funds closed the third quarter with handsome gains. Yet it is premature to speak of a trend reversal.

Funds investing in emerging market bonds lost for the third quarter in a row when measured in dollars, but made a small gain in euros.