IndexMore Webinar: Fixed Income Outlook: Identifying Value in Today’s Market

We recently hosted the latest IndexMore webinar, where our panel explored the forces shaping global fixed income markets and the implications for portfolio construction in an environment characterised by geopolitical uncertainty and volatile markets.

The session was moderated by Nico Katzke, Head of Portfolio Solutions at Satrix, and featured Karim Chedid, Head of EMEA Investment Strategy at BlackRock, James Turp, Fixed Income Portfolio Manager at Ninety-One, and Yusuf Wadi, Head of Exchange Traded Products at Satrix.

The discussion examined the breakdown of traditional diversification relationships, the renewed importance of income within fixed income portfolios and the evolving role of actively managed ETFs. 

Diversification in a Changing Market Environment

A key theme of the discussion was the changing relationship between traditional asset classes.

Historically, bonds have acted as a stabilising force during periods of equity market volatility. However, recent market conditions have demonstrated that this relationship cannot always be relied upon.

Inflation shocks and supply chain disruptions can lead to simultaneous declines in both equities and bonds, challenging conventional portfolio construction frameworks.

As a result, investors are increasingly exploring additional diversifiers such as commodities, gold and strategies designed to exhibit low correlation to traditional asset classes.

Income Opportunities in Fixed Income

Another important theme of the session was the renewed role of income within fixed income portfolios.

Following the reset in global interest rates over recent years, bond yields are materially higher than during the post-global financial crisis period.

This has restored fixed income as a meaningful source of income within diversified portfolios.

At the same time, the panel highlighted that duration risk remains an important consideration in environments where inflation shocks and policy uncertainty can drive bond yield volatility.

Emerging Market Debt

The discussion also explored the role of emerging market debt within global portfolios.

Investor demand for emerging market bonds has increased as higher yields and attractive carry opportunities have made the asset class increasingly appealing relative to developed market debt.

While geopolitical developments may introduce short-term volatility, emerging market debt continues to provide diversification and income opportunities for long-term investors.

South African Fixed Income Outlook

From a local perspective, South African bonds continue to offer relatively attractive real yields compared with many developed markets.

The credibility of the South African Reserve Bank and anchored inflation expectations remain important factors supporting the local bond market.

However, after several strong years of performance, the panel noted that future returns may increasingly depend on income rather than capital appreciation.

Actively Managed ETFs in Fixed Income

The webinar also examined the role of actively managed ETFs within fixed income markets.

Unlike equities, many segments of the fixed income universe are difficult to replicate through traditional indexing approaches.

Actively managed ETF structures provide flexibility to access these segments of the yield curve while maintaining transparency, liquidity and cost efficiency.

Looking Ahead

Key considerations included:

• The breakdown of traditional stock-bond diversification assumptions
 • The renewed importance of income in fixed income portfolios
 • Opportunities within emerging market debt
 • The outlook for South African fixed income markets

As global markets continue to navigate geopolitical risk, policy uncertainty and shifting macroeconomic conditions, disciplined diversification and income generation remain central to resilient portfolio construction.

Watch The Recording

The IndexMore Fixed Income Outlook webinar recording is available on demand.

The session qualifies for Continuous Professional Development (CPD) points for eligible advisers.

Access the recording here.

Disclaimer: 

Satrix Managers (RF) (Pty) Ltd is a registered and approved Manager in Collective Investment Schemes in Securities. Collective investment schemes are generally medium- to long-term investments. With Unit Trusts, Exchange Traded Funds (ETFs) and Actively Managed ETFs (AMETFs) the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit Trusts, the investor holds participatory units issued by the fund while in the case of ETFs and AMETFs, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs and AMETFs are registered as a Collective Investment and can be traded by any stockbroker on the stock exchange, LISP platforms and or via online trading platforms. ETFs and AMETFs may incur additional costs due to being listed on the JSE. Past performance is not necessarily a guide to future performance, and the value of investments / units may go up or down. A schedule of fees and charges, and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF and AMETF Minimum Disclosure Document. AMETFs are ETFs which are actively traded by a Portfolio Manager to adjust the AMETF holdings and asset allocation with the aim to outperform the benchmark. AMETFs differ from ETFs which only track indices. The Manager does not provide any guarantee, either with respect to the capital or the return of a portfolio. The index, the applicable tracking error and the portfolio performance relative to the index can be viewed on the ETF and AMETF Minimum Disclosure Document and/or on https://satrix.co.za/products.