Short Term Strength vs. Medium Term Weakness

Monthly Comment | Fixed Income

Risk appetite took an inflection point mid-March given no meaningful development on the geopolitical front and the Chinese govt’s pledge on more economic support; we see the rebound as an outcome of near-term technical and remain cautious on the medium term growth deterioration

Fund was relatively shielded from rates selloff given limited rates exposure by mandate; the strategy will continue to do well in a rising rate environment

Fund is positioned to capture upside convexity in a defensive fashion; credit duration has been slightly increased and beta position shifted to a lower risk spectrum with more dated subordinated papers in financials and non-cyclical household names in corporates

Curve inversion sparks recession discussion in the market, though certain short term forward yield spared has not yet signalled a recession risk, near term uncertainty is extremely elevated

Fundamental will be the performance driver for the next phase of the market regime as global central banks exit the market place; therefore, we believe our strategy with an active credit mandate in the IG space and limited rates exposure will do well in such an environment

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