09 Jun 2022
The last market cycle was characterized by trend growth, low rates, and yield scarcity, conditions that led investors to believe that favorable risk-adjusted returns could only be found in equities. While risk assets remain instrumental to delivering forward returns, we believe market characteristics today—reflation, high valuation, rising rates—support the case for broadening opportunities to fixed income. Across the bond complex, risk symmetry has improved, yields have risen by nearly two-fold, and coupons have reset to normal levels, enhancing the relative value of bonds to equities.