Bonds – Defensive outcomes developing opportunities

It was a rough year for markets as policy divergence in the West and slowdown in China drove USD strength, commodity price weakness and emerging economy instability. Sovereign bond yields ended little changed, but (especially longer tenor and riskier) credit weakened on default concerns in the energy sector and heavy supply, while EM debt suffered capital flight. Preserving capital as markets adjust is a priority; 2015 has made it clear that patience is required. Effective cash remains above 25% and our Fixed Income Fund is well positioned to continue to provide defensive absolute outcomes as well as being able to take advantage of the developing opportunities. We explore this further in “The Fix: Defensive outcomes developing opportunities” (VIEW LINK)