Fixed income 2021
Unfix your thinking.
Over the last few months, the economic cycle has accelerated more rapidly than ever before, to reach mid-cycle within a matter of months. Equally, near-unanimous consensus expectations like the weakening of the US Dollar that we saw at the end of last year have changed direction altogether, whilst an expected tsunami of corporate defaults has failed to materialise.
Investors have had to “unfix their thinking” to cope with these rapid changes and rapidly shift their portfolios as the economic situation has developed, and will need to do so again - repeatedly - as further changes emerge as global recovery continues through 2021.
In the live video below, Mark Holman, CEO and Portfolio Manager at TwentyFour Asset Management and Simon Lue-Fong, Head of our Fixed Income Boutique share their perspectives and outlook, whilst Andrew Salmon, Head of Investment Communications at Vontobel poses the questions. Although the video covers only 45 minutes, we managed to cover a huge range of topics, so please use the timestamps below to jump to the sections which interest you. Or, relax and let Simon and Mark explain their views.
|The economic cycle and correlations||0:44|
|Inflation, money supply and growth||4:20|
|Central bank actions and inflation targets||6:08|
|The US Dollar||7:50|
|European economies, correlation and the PEP||9:27|
|European inflation outlook||11:21|
|Vaccination and economic recovery||12:03|
|Speed of the economic cycle and corporate defaults, upgrades downgrades||12:45|
|China leading the recovery||17:26|
|Commodity led recovery||19:05|
|Implications for investors|
|Active versus passive fixed income portfolios||21:53|
|Allocation to Emerging Markets||26:02|
|Sectors we like – investing pro-cyclically and embracing credit risks||27:30|
|Avoiding volatility, sectors affected by structural change and countries facing inflation challenges||30:20|
|Remainder of 2021|
|Moving the portfolio through to year end||33:40|
|Expectations for 10-year US treasuries at end of the year||37:42|
|Is it possible to be an activist fixed income investor?||39:50|
|What are the risks around recovery?||41:45|
|Summary of key points||44:10|