Key points
The Dynamic Global Bond Fund delivered a positive return in the first four months of 2022 during an environment of heightened volatility and a heavy sell-off across bond markets.
Fixed income markets have entered a new regime where volatility is likely to be more persistent due to the withdrawal of central bank liquidity support.
Investors should think differently about diversification as the stock/bond relationship is showing signs of changing.
1The fund is actively managed, and the manager is not constrained by the fund's benchmark, which is used for performance comparison purposes only.
This year has been extremely challenging for bond investors, and volatility is set to continue as markets prepare for life without central bank support. We believe this environment will suit our absolute bond return approach, which is flexible, has a strong emphasis on active duration management, and employs defensive hedges to provide diversification against risk assets.
Volatility Is Set to Continue
It has been a tumultuous few months in fixed income, with sovereign bond yields rising sharply and almost every segment of the asset class declining. The unprecedented moves have left many investors questioning how much longer the rout can continue. Although it is difficult to envisage further moves of the same magnitude, particularly in sovereign bond markets, this turbulent period is far from over. If anything, it is only just beginning. We have entered a new fixed income regime as markets prepare for life without the support of central banks.
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