蜜豆视频

We see high grade and investment grade bonds as Attractive. Yields on quality bonds in most major markets are appealing, in our view. We believe that corporate fundamentals are robust and that they should prove resilient to somewhat slower growth. And we anticipate the continuing global rate-cutting cycle will contribute to investor inflows, helping credit spreads stay tight. We also continue to see government bonds as a credible alternative to cash for investors looking to lock in currently elevated yields.

We expect mid- to high-single-digit returns for medium-duration quality bonds in US dollar terms over the next 12 months. We expect these returns to come from both yield and capital appreciation, as steepening yield curves mean investors benefit from 鈥渞oll down鈥� as bonds approach maturity.

Investment grade bonds are also appealing from a risk management perspective. This is because they should perform strongly in a US 鈥渉ard landing鈥� scenario, where we would expect falls in government bond yields to more than offset higher credit spreads.

Despite tight spreads for lower-quality credit, investmentgrade bonds present a favorable risk-reward profile. We anticipate respectable returns for riskier credits, supported by solid economic and corporate fundamentals and low leverage levels, keeping default rates low. Absolute yields of around 7.5% for US and 5% for EU high yield should attract capital flows.

Complementing quality bonds with select short- and medium-duration riskier credit investments, such as high yield, emerging market bonds, or senior loans, can enhance diversification and returns.

Senior loans

We anticipate senior loans to deliver high-single-digit returns in 2025, primarily driven by coupon income. Yields on US and European loans remain elevated at around 9% and 7%, respectively. We believe leveraged loans suit scenarios with resilient growth and gradual rate cuts, which should limit distressed company growth. Investors may benefit from above-average coupon income.

Private credit

Private credit remains an attractive addition to long-term portfolios, especially senior upper-middle market and sponsor-backed loans, which have shown resilience to rising defaults. We expect high-single-digit to low-double-digit returns for private credit in 2025, offering higher yields than listed fixed income peers. Historically, private credit has exhibited lower sensitivity to interest rate volatility, potentially providing portfolio diversification, and benefits from strong covenants and diversified borrower bases.

Equity income strategies

Investors seeking income might consider equity income strategies, including high dividend, dividend growth, or option premia strategies. The MSCI AC World High Dividend Yield Index offered a yield of around 3.6% at the end of February. Options strategies, such as put writing and covered call writing, can enhance income potential by harvesting volatility premia, diversifying portfolio income sources, and may be treated as capital gains in some jurisdictions. We estimate that mixing high dividend, dividend growth, and option strategies could deliver a total yield of around 5-7% per year.

We believe bond ladders should be central to liquidity management, offering a way to invest money needed for known expenses over the next five years while managing interest rate and market risks, prioritizing capital preservation over returns.

For general cash management, we propose a three-tier strategy for investors to balance flexibility with return potential in their liquidity portfolios:

1. Everyday cash: Money for spending within six to 12 months should be held in assets with minimal market, liquidity, and credit risks, given limited recovery time if markets are volatile. Many investors hold excess cash for expenditures beyond a year. Optimizing this cash by taking manageable market, liquidity, interest rate, and credit risks may improve returns, combat inflation, and manage risks.
2. Savings cash: For known expenses with uncertain timing, investors can take limited liquidity and credit risks to boost yields through savings accounts, money market funds, and cash facilities offering higher yields for limited liquidity windows.
3. Investment cash: For cash needed in three to five years, diversifying across instruments can enhance returns for investors with greater risk tolerance. Investment options include short-dated fixed income approaches, structured strategies with capital preservation features, and using borrowing capacity against diversified portfolios to meet spending needs rather than selling high-return assets.

Investors must be willing and able to bear the unique risks of borrowing and structured strategies, including assessing the cost and robustness of leveraged approaches, understanding that borrowing may amplify losses as well as gains, and managing credit, liquidity, and issuer risks of structured strategies.