Fixed income insights

EMD is back on the radar with alpha opportunities, compelling yields and a reasonably positive outlook. But despite its advantages, many multi-asset portfolios hold much less than they should.

In this paper, we discuss the opportunity within bonds and why investors may want to consider moving now to capture these decades-high yields, get cash off the sidelines, and employ efficient, precise tools such as bond ETFs in this new market regime.

Discover how fixed maturity product like (iBonds ETFs) can help you lock in higher yields ahead of potential further rate cuts from central banks.

Built to mature like a bond, trade like a stock and diversify like a fund, iBonds ETFs help you target a specific point on the yield curve – while accessing hundreds of bonds from hundreds of issuers. They’re simpler, cheaper and more diverse than portfolio of individual bonds can be.

With pre-election volatility looming, we still prefer euro-denominated credit over its US equivalents. Euro high yield has an enviable yield cushion, and the BBB-BB bucket within investment grade looks strong. That said, beware the potential for large single-name shifts: careful selection is key.

Dollar stability supports EMD overall, but we like India best given short- and long-term opportunities and its 7% yield. Indian government bonds are now included in key EM benchmarks, so their popularity could soar. Modi’s re-election promises relative policy certainty – good news for investors.

High-yield bonds offer higher yields and are less sensitive to interest rate changes than IG bonds. However, they are less commonly included in portfolios. Investors should consider broad U.S. and European HY bond ETFs for exposure and risk diversification across 1,862 and 682 bonds, respectively.

Yields are at their highest point in years. But with inflation dropping, high cash rates might not last much longer. So, what’s next? It might be time to reconsider fixed income. The market often prices in rate actions before they happen, rewarding the early movers. Now could be the perfect moment to act, and ETFs offer a powerful way to do it.

Bond yields are higher today than they were a decade ago. But peaks don’t last forever. We think investors should act now and lock in higher yields, before rate cuts bring them down. Considering fixed maturity ETFs like iBonds can allow investors to capture the current yields across US treasuries, ItalyBTP government bonds &investment grade credit.

Q2 outlook remains positive for Emerging Markets Debt with strong fundamentals and value opportunities. Inflation may pose challenges for rate cuts in developed markets. Emerging Markets credit quality is improving, with potential for positive rating upgrades in 2024.

With developed market central banks poised to start cutting rates, income opportunities are narrowing. Investors are wondering whether they can find relative value in credit. We see a potential opportunity in two main segments, which we share in our latest Tactical Insights. You might be interested to know they are both denominated in €, not $.

The Fixed Income universe is extensive with a variety of sub-asset classes requiring their own ESG approach. Traditional measures only cover fractions and ultimately fall short. Our PEXT/NEXT™ profiler brings together rigorous bottom-up sector work into a broad but concise infrastructure that forms the basis of our active sustainability approach.