With interest rates constantly in the spotlight, understanding the fixed income dynamics is now more critical than ever. We are delighted to share an article by 𝗦𝗶𝗹𝘃𝗲𝗿𝗱𝗮𝗹𝗲 𝗙𝘂𝗻𝗱𝘀, CIO, Sanjay Guglani, recently published in Namaskar (H1 2014) by Singapore Chapter of The Institute of Chartered Accountants of India; titled “𝗕𝗼𝗻𝗱𝘀 𝗮𝗿𝗲 𝗙𝗼𝗿𝗲𝘃𝗲𝗿: 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱𝗶𝗻𝗴 𝗙𝗶𝘅𝗲𝗱 𝗜𝗻𝗰𝗼𝗺𝗲 𝗢𝘂𝘁𝗹𝗼𝗼𝗸 𝗮𝗻𝗱 𝗢𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝗶𝗲𝘀”.

In this article, Sanjay Guglani unravels the drivers of interest rates volatility, explores the future of the fixed income investments, and highlights the strategies to capitalize on the current market environment.

Executive Summary

• 𝗕𝗼𝗻𝗱 𝘆𝗶𝗲𝗹𝗱 𝗶𝘀 𝗗𝗲𝘀𝘁𝗶𝗻𝘆: In the short run, the direction of interest rates drives bond markets, but in the long run, it is the starting yield that really matters.

• 𝗟𝗼𝗰𝗸-𝗶𝗻 𝗽𝗿𝗲𝘃𝗮𝗶𝗹𝗶𝗻𝗴 𝗲𝗹𝗲𝘃𝗮𝘁𝗲𝗱 𝘆𝗶𝗲𝗹𝗱𝘀: Don’t miss the forest for the tree – the prevailing interest rates are high and should be ‘locked-in’.

• 𝗙𝗶𝘅𝗲𝗱 𝗧𝗲𝗻𝘂𝗿𝗲 𝗙𝘂𝗻𝗱𝘀 𝗽𝗿𝗼𝘃𝗶𝗱𝗲 𝗵𝗶𝗴𝗵𝗲𝗿 𝗮𝘀𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗼𝗳 𝗿𝗲𝘁𝘂𝗿𝗻𝘀: Non-recourse embedded leverage can render superior risk-adjusted returns.

• 𝗕𝗲𝘀𝗽𝗼𝗸𝗲 𝗧𝗿𝗲𝗮𝘀𝘂𝗿𝘆 𝗙𝘂𝗻𝗱𝘀 𝘀𝗶𝗴𝗻𝗶𝗳𝗶𝗰𝗮𝗻𝘁𝗹𝘆 𝗶𝗻𝗰𝗿𝗲𝗮𝘀𝗲 𝗰𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝘁𝗿𝗲𝗮𝘀𝘂𝗿𝘆 𝗿𝗲𝘁𝘂𝗿𝗻𝘀: Through Liquidity, Leverage, and Laddering.

• 𝗖𝗼𝗺𝗽𝗲𝗹𝗹𝗶𝗻𝗴 𝗜𝗻𝗰𝗼𝗺𝗲 𝗮𝗻𝗱 𝗣𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹 𝗚𝗮𝗶𝗻𝘀: At current yields, bonds offer a compelling combination of attractive income generation and potential capital appreciation. For anyone focused on wealth preservation and/or income generation, bonds remain a vital asset class.

Discover the insights behind why “𝗕𝗼𝗻𝗱𝘀 𝗮𝗿𝗲 𝗙𝗼𝗿𝗲𝘃𝗲𝗿” in this comprehensive article.

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