Meet the Manager, Vincent Chung

2024-2025
In 2024, Vincent was appointed co-portfolio manager of the Diversified Income Bond Strategy, working closely with Ken Orchard.

2019–2024
Vincent joined T. Rowe Price’s Fixed Income Division as an associate portfolio manager, working with the Global Multi-Sector Bond team, looking at emerging and developed market rates and credit.

2014–2019
Prior to joining T. Rowe Price, Vincent was an investment analyst at Observatory Capital Management, focusing on emerging markets sovereign and corporate debt. Vincent was also employed by the Royal Bank of Scotland as an analyst in its markets division.

Can you begin by telling us about your background? How did you come to pursue a career in asset management, and what first brought you to T. Rowe Price?

At university, I studied physics. I chose the subject because I was very interested in deriving how things worked in the world, and I thought physics would give me insight into that. What attracted me to financial markets is, again, a problem, although not an exact science. I liked thinking about how some companies succeed while others fail and then how countries manage to get resources and how they deploy them. I believe the mathematical nature of physics pulled me more toward the fixed income and currency markets over time. In physics, things are derived from first principles in trying to understand how the world works. Financial markets are not the same, though there are some underlying relationships that govern how they tend to work. So it’s a bit like an “augmented” version of physics, where there is a major difference in terms of the uncertainty of outcomes.

The uncertainty arises because the psychology of investor behavior can very often have a major impact on how financial asset prices move through time. This is where the economics or finance diverge from the physical sciences. In asset management, you face a much wider spectrum of outcomes compared with the more specific outcomes of classical physics. Arguably, you could say it’s more similar to quantum physics, where you can have many outcomes. What attracted me to T. Rowe Price was the ability to work at a truly global asset management company where I could learn and expand my product skill set. Prior to joining T. Rowe Price, I spent a couple of years at a global credit hedge fund, working on emerging market corporate and sovereign credit. Moving to T. Rowe Price and working with the global multi-sector bond strategies has allowed me to expand my skill set into both emerging and developed market rates as well as into other developed market credit.

A more rounded skill set has made me a better investor. It was also apparent to me that the liquidity in fixed income markets was changing, and one needed to have a more expansive skill set in those times when liquidity in certain asset classes could become quite constrained. For example, there are times when you may not be able to enter or exit a trade very easily within parts of emerging market credit.

As co-manager, can you tell us about T. Rowe Price’s Diversified Income Bond Strategy? Why might it be a good option for fixed income investors in today’s volatile markets?

I am one of the co-portfolio managers of the Diversified Income Bond Strategy together with Ken Orchard. Our aim is to deliver an attractive income stream over the full cycle, managing risk in such a way that our investors do not need to worry greatly about market timing. And so how do we go about doing that? First, we look to manage actively both our duration and credit risk. We manage overall portfolio duration between zero and eight years. With exposure to global bond markets, we can take duration risks in different countries. This is an advantage in times like the present where there are divergences in monetary and fiscal policies among developed markets and emerging market economies.

In terms of credit exposure, we have experienced much shorter market cycles in recent years. So being able to be flexible in terms of asset allocation in credit is an advantage for the strategy. It’s beneficial for our investors since they do not have to be actively managing their bond exposures in order to try to capture the alpha that’s available at different points in the bond market cycle. Last, in terms of the way that we take credit risk in the strategy, we do not impose structural overweights in certain asset classes. Rather, Ken Orchard and I are looking at what is the best risk/reward that we see from our sector allocation process. At the macro level, we first ask, “Is it a good time to take credit risk?” And if so, “Which asset classes do we want to take that credit risk in?”

“Our aim is to deliver an attractive income stream over the full cycle….”

We have five sector portfolio managers who cover securitized debt, emerging market credit, corporate credit, investment-grade and mortgage-backed securities. So we allocate a portion of capital to each sector portfolio manager, while also giving them guidance in terms of what we would like to see in the sleeve to manage overall risk, for example, in terms of energy credits. There is flexibility with regards to where sector portfolio managers deploy their capital, meaning it is very much a collaborative process. Sector portfolio managers have the important task of funneling the best ideas from T. Rowe Price’s bottom-up analysts to the global multi-sector funds like the Diversified Income Bond Strategy.

We saw some sharp initial moves in U.S. Treasury yields following President Donald Trump’s tariff announcements. Might this also create opportunities for investors in non-U.S. bond markets?

Investors today are more interested in fixed income strategies that are able to invest globally, because the opportunity set is quite wide in terms of country selection. Before, we talked about the importance of credit issues—selecting the right sectors within fixed income and, within each sector, selecting the right securities. I believe that, today, picking the right duration exposure within each sovereign bond market is very important. The tariff uncertainties are not uniformly distributed, and some non-U.S. bond markets are currently behaving more like a safe-haven asset than others. Also, the prospect of greater divergence in monetary policies is creating opportunities for capital gains for fixed income investors with a global mandate.

The short-term impacts coming from President Trump’s tariffs will, in the short term, be inflationary for the U.S. economy and likely deflationary for the rest of the world. Chinese goods exports to America will likely be rerouted via different countries where possible.

It also brings into question the longer-term implications as to whether international investors who hold significant amounts of U.S. Treasury bonds will reconsider their exposure. Countries that have a stronger net international investment position than the U.S. and more conservative fiscal policies, such as Germany and Sweden, may see firmer demand for their bonds internationally. This could extend to those Asian countries where there has been a buildup of credibility over time, especially those countries that have been able to manage their monetary policy and exchange rates successfully.

Congressional Budget Office (CBO) projections show exceptionally high U.S. fiscal deficits over the medium term. How worried should bond investors be that we might see a secular rise in yields?

We are currently seeing an increased scrutiny of the U.S. Treasury market by investors because of the increased policy uncertainty in the U.S., where tariffs and fiscal prospects are clearly interconnected. Some have gone so far as to question the continuing role of U.S. government bonds as a preferred safe-haven asset for many global investors. In April, during the tariff turmoil, the correlation breakdown that we saw between the dollar, Treasuries, and U.S. risk assets has increased investor scrutiny. The sharp spike in the 10-year U.S. yield as the dollar fell after the April 2 Liberation Day tariff announcement is a key reason why investors may not want all of their duration exposure to be in the U.S. bond market.

“How the government tackles the next economic slowdown…will be very important.”

Fiscal discipline will definitely remain one of the key concerns for market participants in 2025. Many would say that the federal budget deficit in the U.S. is too high for this stage of the economic cycle, for an economy that had been doing well and which was seen to be close to full employment by mainstream economists. Why is this so important? If the U.S. economy is about to enter a tariff-driven downturn, as a growing number of analysts now seem to expect, is there sufficient fiscal space for U.S. President Donald Trump’s administration to take an offsetting stimulus? And if fiscal stimulus is required, what will be the projected deficits over the medium term starting from a CBO baseline, which is already around 6% of gross domestic product.

Any additional fiscal impulse could create even more worrying dynamics in terms of how quickly the U.S. federal debt is expected to grow. How the government tackles the next economic slowdown—which could arrive later this year—will be very important. The greater the fiscal spend, the more investors will demand a higher risk premium, leading to rising U.S. bond yields. The other side of the U.S. fiscal problem is that it could also lead to increased inflation pressures further down the line. I believe we are already living in a world where trend inflation is higher than during the post-global financial crisis norm. And in the event that high U.S. tariffs accelerates a structural breakdown in global trade, then this kind of supply-side shock also points to higher inflation over the medium term.

The U.S. tariff threat has led to a rise in both short- and long-term inflation expectations. Are markets exaggerating the inflation risk from what may be more of a one-off adjustment in the price level?

While import tariffs in the short term are expected to impart a one-off shock to the price level, the other side of the argument discussed above is that loose budget policies over the medium term could lead to rising inflation pressures.

After the COVID years, many governments seem prepared to issue more debt with increased reliance on fiscal spending. In the near term, the concern of U.S. investors is that inflation will be higher in the next couple of years, boosted in 2025 by higher import tariffs. In the longer term, it is quite possible that the widespread adoption of AI will boost productivity and lower costs, creating deflationary pressures.

Given how election cycles have worked in the past and how economic policies have recently become more populist, it’s difficult to imagine scenarios where a U.S. government tightens fiscal policy significantly in order to contain inflation, raising taxes as well as cutting spending. The Trump administration has signaled a strong desire to cut public spending while simultaneously cutting taxes. That is the intention, but whether the DOGE (Department of Government Efficiency) can trim government spending enough to finance meaningful tax cuts seems an open question. Also, if the proposed spending cuts are backloaded, they are less certain to be delivered under what could be a different government. So I think it’s hard to make a case that the U.S. budget deficit is going to shrink materially in the next couple of years, which is likely to maintain a degree of pressure on government bond yields.

Last, Vincent, can you please share with us some of your personal interests? How do you relax outside of work?

I have a young child of 18 months, so most of my time outside of work is spent with my family. I especially like taking my young son to places that hopefully will pique his interest in the world around him. I have always liked museums, and in London we have so many to choose from, such as the Science Museum and the Natural History Museum, with its world-famous exhibition of dinosaur skeletons.

And in terms of my own interests, when I get the time, one of my key hobbies is scuba diving. What’s interesting for me about diving is that it puts you into a state which is vulnerable. You have to think carefully about the completely different environment that you are in. Night diving, for example, is a completely different experience compared with normal daylight scuba diving. You feel very vulnerable because it is almost pitch black. However, on the positive side, it opens up another silent world of nocturnal marine activity.