The opening months of 2023 have been something of a curate’s egg for the global high yield market. January witnessed a truly monumental rally that surprised many with its ferocity, driven in no small part by the supportive technical environment. However, February’s performance has been more circumspect as, among other things, rates markets have sold off and put pressure on total returns.
The positive correlation of bond and equity returns stood out in 2022. Vincent McEntegart, Co-Manager of Aegon Diversified Monthly Income Fund, and Nick Edwardson, Senior Investment Specialist of Multi Asset & Solutions, discuss how the relationship between equities and bonds might change as the cycle progresses, how portfolios can adapt to drive returns and their reaction to current concerns around financial stocks.
The annual J.P. Morgan Healthcare Conference has become one of the preeminent healthcare investment gatherings in the industry. It brings together members of the investment community with industry leaders from hundreds of companies, ranging from emerging fast-growth companies and innovative technology creators, to large and established for-profit and not-for-profit entities.
Although markets have rallied, the outlook for 2023 remains uncertain. Vincent McEntegart, Co-Manager of Aegon Diversified Monthly Income Fund, and Nick Edwardson, Senior Investment Specialist of Multi Asset & Solutions, discuss the attractiveness of bonds verses equities, having the right balance of asset classes and picking opportunities that will be the most resilient in this environment.
They think it’s all over
Challenging economic conditions are setting the stage for an interesting year ahead. As the economy slows and the cycle ages, companies will likely face financial headwinds. Although firms are entering the year with solid balance sheets, can high yield issuers weather a downturn?
As we head towards the completion of Rishi Sunak’s first 100 days as UK Prime Minister, it is worth reflecting on how sterling credit markets have fared since the end of the disastrous and short-lived Truss Premiership.
Although the economy will likely face a recession, there are signs that 2023 will be a better year with inflation easing and valuations facing less of a headwind. Nick Edwardson, Senior Investment Specialist in our Multi-asset and solutions team, discusses how we expect the correlation between bonds and equities to flip, the evolving currency markets environment and the impact of the global transition to net zero. The ability to make timely asset allocation changes will be key to navigating this shifting investment landscape.
Each month the team behind our sustainable equity funds answer five topical questions in five minutes – or sometimes a little over! They tackle questions on sustainability issues, introduce new stocks and discuss the impact of market conditions.
In the latest edition of Strategic Thinking, Colin Finlayson, co-manager of the Strategic Bond strategy, shares his thoughts on the key macro-economic factors that are worth watching for to determine the direction of fixed income markets in 2023. Colin also explains the reasons why we believe 2023 offers a much more positive outlook for bond markets and how we plan to take advantage of this within our portfolio positioning.
There have been some counterintuitive yet confident statements coming from office REITs over the last few months. A large UK REIT/developer is feeling confident to deliver rather bulky offices in the City of London office market by 2025. Another REIT/developer in Australia expects the ratio development and investment income in office could actually shift toward the former. Counterintuitive, as office space use is expected to decline by roughly 10% as a result of work-from-home trends, while the expected economic deceleration could also weigh on demand.
This note provides an overview of the main developments within our diversified income strategy in 2022 and how we are positioned for 2023 and beyond.
This is the final instalment of our Future of series. We hope you have enjoyed our deliberations over how some sectors might evolve to face future challenges.
While Mick Jagger wanted to paint red doors black, it is an American tradition from the 1950s that is the inspiration for retailers across UK & Europe choosing black over the past decade. Black Friday, which is the day after Thanksgiving in the US, marks a consumer purchasing frenzy with people trying to snap up bargains ahead of Christmas. What is the impact of this mass consumerism?
I was recently reading the ESG section of one of our Japanese holdings, Kubota, when I came across some interesting statistics highlighting major issues in the food chain.
Despite significant challenges, education has been one of the world’s success stories. Consider the following: in 1820, 88% of the world’s population was illiterate, compared to only 14% in 2016. Between 1970 & 2020, the percentage of adults without formal education went from 23% to less than 10%.
It is 5am and your smart clock alarm sounds earlier than usual. Has it malfunctioned? No, it scanned your schedule and adjusted itself for your 8am flight today. It’s time to get up. The coffee machine starts making your cappuccino. The shower automatically turns on and warms to your preferred 37 degrees. A drone delivers an unexpected package – some medicine. The health sensors around your home detected an impending cold or flu and placed an automatic order. The electric car is ready to go, charged by the solar panels on your roof. As you set off you see a family of flying robots land on top of your apartment block; they have come to clear the leaves blown into the guttering overnight.
Alongside the traditional income ‘engines’ of bonds and equities, the Aegon Diversified Monthly Income Fund has had a significant exposure to alternative investments. This category of assets includes property and what we call ‘specialist income’ which includes infrastructure and renewable energy. In turn, these assets have contributed to the Fund’s successful delivery of income, with 100 monthly distributions since launch on 25 February 2014.
Government bond markets have experienced material volatility year to date, with yields rising to reflect changes in expectation for policy rates globally. Central banks are raising interest rates in response to the continued high levels of inflation being experienced in many countries. At the time of writing the bond markets are already discounting increases in rates to levels not seen since before the financial crisis of 2008. In the UK in particular, bank rate is already at 1%. In the UK, the market is implying through the yield curve that bank rate will peak at around 2.25%, in the US around 3% and in Europe 1.5%. The implied curves are shown below.
In ancient Greece, Hippocrates made early attempts to introduce scientific rigor to the “art” of medicine. Numerous intellectual contributions over the subsequent thousands of years have shaped medicine into the scientific field we know today.