Morningstar: Positive fixed income outlook boosts relevance of income multi-asset funds

Higher yields

Multi-asset managers should capitalise on income opportunities and balance risk and returns by taking advantage of flexible asset allocation, Morningstar analysts have said.

Bryan Cheung, associate director, and Tom Mills, senior analyst at Morningstar Research, urged managers to look at mitigating risks in a changing market environment and make the most of their fixed income allocation to attract income investors. After the pandemic caused a decline in capital and income and the large sell-off in 2022 eroded multi-asset funds' long-term returns, the firm said there had been a trend towards higher distribution yield and bond allocation. There had also been a "gradual shift" to higher quality bonds with an increase in investment-grade exposure and a declin...