Fixed Income: A standout asset class in 2023

The Schroders Australian Fixed Income team looks at the once in a decade opportunity for Fixed Income and how the cycle is highly likely to be turning in favour of bonds in 2023.

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The fastest inflation in decades and the resultant central-bank rate increases have strained fixed-income returns in recent times. But with inflation receding and concerns about the stability of banks now sparking a flight to the relative safety of government bonds, the asset class is back in vogue. Not only is the short-term cyclical environment highly favourable for fixed income, but the reset fixed income endured last year leaves the asset class well placed as we transition to the ‘next economy’, potentially involving more permanently higher levels of inflation and interest rates. 

The market environment is likely to remain volatile, as the battle between slow growth and inflation plays out, but staying liquid, with an up-in-quality credit stance and overweight interest rate duration is our preference, and we make a number of recommendations for asset allocators to consider: in particular, to lift strategic allocations, and to lift dynamic allocations and improve their liquidity characteristics and quality.

Learn more about investing in Schroders’ Fixed Income Funds.

Read full reportFixed Income: A standout asset class in 2023
11 pages129 KB

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