Raza acknowledges that fixed income, as an asset class, has not been the most exciting over the past few years, especially in 2022, as investors were left with disappointing yields amid repricing and sell-off. However, yields have since risen as inflation slows down and central banks move closer to the end of their hiking cycle, making fixed income an attractive option for mitigation during the economic downturn.
Expecting a soft, shallow recession to be the base case this year, UOB Asset Management (UOBAM) believes it is too soon for investors to be risk-on, although they do not have to be as conservative as they were last year.
As a firm, UOBAM has also reduced its cash levels and become “less negative” than it was in 2022. Believing that there would no longer be significant interest rate hikes moving forward, UOBAM has started to increase its holdings in fixed income, finding 6% yields in investment-grade corporate bonds, says director and head of multi-asset strategy Anthony Raza in an interview with The Edge Singapore.
