For much of the last decade, fixed income has been the dinner guest that no one wanted to sit next to. Low yields, scarring losses, and correlation breakdowns left duration firmly out of favour. But, argues Haran Karunakaran, Investment Director at Capital Group, that sentiment may be both outdated and dangerously misaligned with the realities of today’s market.
An audience of advisers, researchers, and asset allocators gathered in Sydney last week for an intimate discussion with Haran Karunakaran, dissecting the unique opportunities and challenges facing fixed income investing today. Against a backdrop of economic uncertainty, where inflationary pressures, central bank policies and liquidity concerns intersect, Karunakaran, fixed income investment director at Capital Group, painted a nuanced picture of an asset class that is experiencing a renaissance — albeit one with caveats.
Credit and equity markets both suffered a very bad 2022, as the collapse of negative correlation between stock and bond prices left no safe haven for investors. But 2023 could be a big year for bonds, with analysts warning investors waiting on the sidelines that they risk missing out.
