Capital IdeasTM
Investment insights from Capital Group
債券
Edward Harrold
There is a new reality taking shape in global markets and investors may need to reset their expectations.
Perhaps the highest-profile shift is the return of inflation. Even as global inflation begins to subside, consensus data suggests levels will remain well above where they have been over recent decades.
Investors, regardless of where they are based, may have to look beyond their domestic market for income-generating assets.
Traditional sources of income have been disrupted
The pandemic and its aftermath have increased idiosyncratic risk for investors looking to generate income. For example:
- Disrupted supply chains and labour market shortages have aggravated inflation pressures.
- Covid shutdowns and regulatory pressure led to the cancellation of many dividends in developed markets, particularly Europe, though many have now been reinstated.
- Instability in the banking sector in 2023 led to a rise in volatility for bond markets and valuations.
- Commercial real estate, particularly office and retail sectors, have come under pressure from tighter lending conditions.
As traditional sources of income come under pressure, investors will need to evaluate how they continue to meet income goals. One approach is to complement these traditional assets with higher-income solutions to generate a reliable income stream to help withstand inflation and help smooth periods of market volatility.
Higher inflation requires higher-income solutions
Yield on assets compared with US Consumer Prices Index
.png "Higher inflation requires higher-income solutions")
Past results are not a guarantee of future results.
Data covers period from 31 July 2010 to 31 July 23. Inflation is based on US Consumer Price Index (CPI) (all items) annual percentage. Global equities represented by dividend yield of MSCI All Country World Index, global bonds represented by yield-to-worst of Bloomberg Global Aggregate Bond Index, global real estate represented by dividend yield of MSCI Global Real Estate Index. High yield represented by yield-to-worst of JPMorgan US Corporate High Yield 2% Issuer Index. Emerging market debt represented by yield-to-worst of JP Morgan EMBI Global Diversified Index. Sources: Bloomberg, Capital Group
The complementary role of global high income
Most investors will understand the benefits of combining assets with different attributes to reduce risk – but diversification can also be a key part of generating a consistent high income from an investment portfolio.
An approach that combines higher-yielding fixed income sectors such as corporate high yield and global emerging market debt could complement domestic strategies in the following ways:
- Higher yield potential: Despite rises in developed market investment-grade bond yields, with current yields at 3.8%[1], they remain below or roughly in line with inflation, depending on where investors are based. In contrast, US high yield bonds and emerging market hard currency debt, as measured by their respective indices, offer yields of 8.4% and 8.1%, respectively.[2]
Higher yield not only presents the potential for higher income, it is also a key driver of total returns. A consistent high level of income can help to smooth periods of volatility and deliver a compelling long-term total return, which could offer a smoother ride for investors.
- Country diversification: Rising political and economic risk have created a challenging backdrop for investors in both developed and emerging markets. That being the case, greater exposure to global assets could help provide more consistent income.
There are 25 developed corporate high yield markets and more than 80 countries with emerging sovereign and corporate bond markets. The combination of high yield and emerging market bonds gives investors access to a deep opportunity set with much greater economic diversification.
- Differentiated risk and return drivers: A broader investment universe expands the opportunity set, which allows investors to draw on a wider range of return drivers. Tapping into different return drivers allows investors to diversify credit risk by region, sector, quality and issue. It also raises the potential for more diversified interest rate and currency exposure.
Combining two of the highest-yielding bond markets — emerging market debt (EMD) and high yield bonds — could not only help increase the income available but could also amplify diversification benefits without taking on excessive additional risk.
[1] As at 31 July 2023. Global investment grade bonds measured by yield-to-worst of Bloomberg Global Aggregate Index. Source: Bloomberg Aladdin
[2] As at 31 July 2023. US High yield measured by yield to maturity (YTM) of Bloomberg US High Yield 2% Issuer Cap Index, emerging market hard currency debt measured by JPMorgan EMBI Global Diversified Index. Source: BlackRock Aladdin
Statements attributed to an individual represent the opinions of that individual as of the date published and may not necessarily reflect the view of Capital Group or its affiliates. While Capital Group uses reasonable efforts to obtain information from third-party sources which it believes to be reliable, Capital Group makes no representation or warranty as to the accuracy, reliability or completeness of the information. This material is of a general nature, and not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities. It does not take into account your objectives, financial situation or needs. Before acting on the information you should consider its appropriateness, having regard to your own investment objectives, financial situation and needs.
This communication is issued by Capital International Management Company Sàrl (“CIMC”), 37A avenue J.F. Kennedy, L-1855 Luxembourg, unless otherwise specified, and is distributed for information purposes only. CIMC is regulated by the Commission de Surveillance du Secteur Financier (“CSSF” – Financial Regulator of Luxembourg) and is a subsidiary of the Capital Group Companies, Inc. (Capital Group).
In Hong Kong, this communication has been prepared by Capital International, Inc., a member of Capital Group, a company incorporated in California, United States of America. The liability of members is limited.
In Singapore, this communication has been prepared by Capital Group Investment Management Pte. Ltd., a member of Capital Group, a company incorporated in Singapore. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. Neither has it been reviewed by any other regulator.
In Australia, this communication is issued by Capital Group Investment Management Limited (ACN 164 174 501 AFSL No. 443 118), a member of Capital Group, located at Suite 4201, Level 42 Gateway, 1 Macquarie Place, Sydney, NSW 2000 Australia.
All Capital Group trademarks are owned by The Capital Group Companies, Inc. or an affiliated company in the US, Australia and other countries. All other company and product names mentioned are the trademarks or registered trademarks of their respective companies.
© 2023 Capital Group. All rights reserved. Europe/AxJ D
過去の実績は将来の成果を保証するものではありません。投資の価値および投資収益は減少することも増加することもあり、当初投資額の一部または全部を失うことがあります。本情報は投資、税務もしくはその他の助言の提供、または証券の売買の勧誘を意図するものではありません。
個人に帰属する記述は、その個人の出版日現在の意見を述べたものであり、必ずしもキャピタル・グループまたはその関連会社の意見を反映したものではありません。特に明記がない限り、すべての情報は記載された日付現在のものです。一部の情報は第三者から取得したものであり、そのため、かかる情報の信頼性については保証いたしません。