Rathbones Asset Management Head of Fixed Income Bryn Jones and Fund Manager Stuart Chilvers explain how higher bond yields are creating a more attractive opportunity set and why making the most of it demands sharper choices.
It’s been a challenging summer for bond markets. Worries about inflation and interest rates have collided with concerns about rising government borrowing. At the same time, the glut of new issuance from America’s biggest tech companies has stoked unease about how much debt investors can comfortably absorb, helping to push up borrowing costs.
These pressures have combined to drive a significant reset in bond yields across fixed income markets. For investors who look to bonds as a source of stability, that’s sometimes been uncomfortable. But higher yields are also creating very attractive opportunities, particularly for active managers with the flexibility to choose where to take risk and which bonds to own, rather than simply following an index.
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