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 ๐ฆ๐ถ๐น๐๐ฒ๐ฟ๐ฑ๐ฎ๐น๐ฒ ๐๐๐ป๐ฑ๐, CIO, Sanjay Guglani, recently published in Namaskar (H1 2014) by Singapore Chapter of The Institute of Chartered Accountants of India; titled “๐๐ผ๐ป๐ฑ๐ ๐ฎ๐ฟ๐ฒ ๐๐ผ๐ฟ๐ฒ๐๐ฒ๐ฟ: ๐จ๐ป๐ฑ๐ฒ๐ฟ๐๐๐ฎ๐ป๐ฑ๐ถ๐ป๐ด ๐๐ถ๐ ๐ฒ๐ฑ ๐๐ป๐ฐ๐ผ๐บ๐ฒ ๐ข๐๐๐น๐ผ๐ผ๐ธ ๐ฎ๐ป๐ฑ ๐ข๐ฝ๐ฝ๐ผ๐ฟ๐๐๐ป๐ถ๐๐ถ๐ฒ๐”.
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
* ๐๐ผ๐ป๐ฑ ๐๐ถ๐ฒ๐น๐ฑ ๐ถ๐ ๐๐ฒ๐๐๐ถ๐ป๐: 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.
* ๐๐ผ๐ฐ๐ธ-๐ถ๐ป ๐ฝ๐ฟ๐ฒ๐๐ฎ๐ถ๐น๐ถ๐ป๐ด ๐ฒ๐น๐ฒ๐๐ฎ๐๐ฒ๐ฑ ๐๐ถ๐ฒ๐น๐ฑ๐: Donโt miss the forest for the tree โ the prevailing interest rates are high and should be โlocked-inโ.
* ๐๐ถ๐ ๐ฒ๐ฑ ๐ง๐ฒ๐ป๐๐ฟ๐ฒ ๐๐๐ป๐ฑ๐ ๐ฝ๐ฟ๐ผ๐๐ถ๐ฑ๐ฒ ๐ต๐ถ๐ด๐ต๐ฒ๐ฟ ๐ฎ๐๐๐๐ฟ๐ฎ๐ป๐ฐ๐ฒ ๐ผ๐ณ ๐ฟ๐ฒ๐๐๐ฟ๐ป๐: Non-recourse embedded leverage can render superior risk-adjusted returns.
* ๐๐ฒ๐๐ฝ๐ผ๐ธ๐ฒ ๐ง๐ฟ๐ฒ๐ฎ๐๐๐ฟ๐ ๐๐๐ป๐ฑ๐ ๐๐ถ๐ด๐ป๐ถ๐ณ๐ถ๐ฐ๐ฎ๐ป๐๐น๐ ๐ถ๐ป๐ฐ๐ฟ๐ฒ๐ฎ๐๐ฒ ๐ฐ๐ผ๐ฟ๐ฝ๐ผ๐ฟ๐ฎ๐๐ฒ ๐๐ฟ๐ฒ๐ฎ๐๐๐ฟ๐ ๐ฟ๐ฒ๐๐๐ฟ๐ป๐: Through Liquidity, Leverage, and Laddering.
* ๐๐ผ๐บ๐ฝ๐ฒ๐น๐น๐ถ๐ป๐ด ๐๐ป๐ฐ๐ผ๐บ๐ฒ ๐ฎ๐ป๐ฑ ๐ฃ๐ผ๐๐ฒ๐ป๐๐ถ๐ฎ๐น ๐๐ฎ๐ถ๐ป๐: 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 โ๐๐ผ๐ป๐ฑ๐ ๐ฎ๐ฟ๐ฒ ๐๐ผ๐ฟ๐ฒ๐๐ฒ๐ฟโ in this comprehensive article.
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