The year of 2023 was characterised by global central banks fighting inflation, and outright yields in investment grade bonds rising to be at or close to 20 year-highs. With yields compressing in other asset classes, investment grade fixed income returns have once again become competitive.
As markets adjust to the reality of higher long-term interest rates and persistent inflationary pressures, bonds have once again regained their relevance, underscoring the important role this asset class plays in investment portfolios. As well as potentially protecting portfolios from geo-political shocks and economic downturns, fixed income can generate a stable income for investors, and is currently delivering a baseline annual yield of 5-7%.
