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Inflation and rising rates remain at the forefront of investors’ minds. Fixed income investors have faced a testing combination of multi-decade inflation highs and a hawkish policy shift from major central banks, which has led to a new rising rates cycle.
With the prospect of further volatility and higher interest rates, what can investors do to help shield their portfolios from interest rate risk and the rising cost of money?
The hunt for yield has been one of the major challenges for investors over the past decade. Over that period, ultra-low interest rates have meant the so-called ‘risk-free’ component of most fixed income portfolios has produced results that have barely kept up with inflation, if at all.
However, bond yields are finally starting to look attractive again but are they priced for the scale of the macro headwinds ahead?
The combination of persistently high inflation, slowing growth and geopolitical unrest has created an almost unsolvable riddle for central banks. Will they be forced to choose between trying to avert recession and meeting inflation targets?
Investors need managers with the experience and insights to navigate policy uncertainty and identify pockets of value across the full breadth of fixed income sectors.
Amid the risk of recession, a falloff in consumer spending, elevated energy prices and higher costs of capital, corporate earnings are under threat. After a decade of cheap capital and strong growth, business models will face heightened scrutiny, with the weaker ones likely to get found out.Security selection will be vital for success. Investors need managers with deep understanding of companies and industries and the ability to make the right choices to futureproof their portfolio.
Interest Rate Capabilities
Flexibility to adapt to different market cycles and environments, including when interest rates are rising.
Ability to minimise default risk through a powerful combination of expertise, deep resources and a time-tested process.
Emerging Markets Capabilities
Scale and experience to access and cover all segments of emerging markets debt including frontier markets.
Whenever the tide turns, make sure your portfolio has an anchor.
Invest on the right side of societal and environmental change.
Explore our global range of strategies and solutions focused on client outcomes.
At T. Rowe Price, we believe that empowering our fixed income experts with the freedom to think and the freedom to explore can deliver better outcomes for our clients.
Our active management process empowers fixed income investment professionals free to think. explore and perform.
What is freedom in Fixed Income for Portfolio Manager Matt Lawton? He describes it as being empowered to enable change and accelerate impact outcomes.
What is “Freedom in Fixed Income”? Portfolio Manager, Mike Della Vedova, explains why our unconstrained approach helps deliver long-term results for clients.
Portfolio Manager, David Stanley, discusses the benefits of “Freedom in Fixed Income” and the attractive investment opportunities it can bring.
Hear from Razan Nasser, Emerging Markets Sovereign Analyst and Willem Visser, Associate PM Fixed Income ESG, on how the freedom to seek and share different perspectives empowers our investment teams to explore new ideas.
A consistent approach: tried and tested for over 50 years
All data as at 31.12.22.
1The combined multi-asset portfolios managed by T. Rowe Price Associates, Inc. and its investment advisory affiliates. This figure includes assets that are held outside of T. Rowe Price, but where T. Rowe Price influences trade decisions.
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