The post-pandemic world left in its wake a period of above-trend growth, inflation, and interest rates. With all seemingly moderating, the Fed seems beginning to move off its lengthy pause, potentially signaling an entry point for Fixed Income investors who have enjoyed a period of higher-than-normal risk-free rates. With elevated yields increasing the attractiveness of bonds, active managers can help investors capitalize on the abundant relative value opportunities across a broad range of fixed-income sectors that are well-positioned for solid risk-adjusted returns over the long term.
As investors adjust to a potential new global paradigm – a higher-for-longer environment with rates hovering above the low levels of the past two decades – PGIM Fixed Income discusses why we are likely entering a decade where returns are likely to be above those achieved over the past decade and how “Yield is Destiny”.
Key Takeaways- Global growth and inflation will continue to moderate allowing the Fed to continue its easing cycle.
- Interest rates should remain relatively range-bound, with room for modest interest rate cuts creating a favorable fixed income backdrop.
- With yields elevated, bonds offer investors more compelling risk-adjusted return opportunities than stocks
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Michael Collins, CFA, is a managing director and executive portfolio advisor for Core, Core Plus, Absolute Return, and other Multi-Sector Fixed Income strategies. Before stepping into the advisor role in early 2024, Collins was a senior portfolio manager on the Multi-Sector Team. |
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