Global credit income 2020 overview & 2021 outlook

Key market highlight across 2020

Welcome to the GCI in 90 seconds. We are going to do a summary of 2020 and as well as our outlook for global credit in 2021.

After a sharp sell-off in Q1 2020, asset prices re-bounded driven by impressive monetary and fiscal stimulus. Amazingly, investment grade credit spreads were largely unchanged on the year, but that masks the huge intra year move that we experienced. UK markets outperformed global counterparts as a Brexit deal was agreed prior to the New Year. High yield bonds remained volatile in 2020 but sustained a strong rally in the second half of the year.

Key forward looking themes and ideas

We maintain a positive view on both high yield and emerging markets as we look forward. In emerging market debt, our preference remains Asian corporates and within high yield our preference remains Europe. Investment grade exposures have been reduced in the strategy, but we continue to see good security selection opportunities. Looking forward, we continue to think the demand for credit to source income will remain strong in 2021. With only 4% of global fixed income yielding above 4%, we do think it is important to think about a flexible and active strategy to delivery attractive income and total returns.

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