Best Ideas: Bonds are back
Marketing Communication
Bonds are back
We believe that bonds are back on the scene and could represent an opportunity for investors, as we expect them to recover over 2023. The focus should be on high-quality credit at a global level, an active duration stance and currency management, as both monetary and fiscal policies in developed and emerging markets are expected diverge during the year. Investors should be careful and pay attention to liquidity risk and corporate leverage1. We do expect markets to continue looking at inflation numbers and the Fed’s reaction, with a possible pivot by the end of Q1 with “terminal rate” at 5.25%, but attention could soon shift towards growth and recession fears2.
Start Cautious | ⏰ Q1 2023 → Q2 2023
We believe that the economic backdrop should translate into a continued uncertainty for financial markets during the first half of 2023, featuring a profit recession and high inflation. Investors should consider starting the year with a defensive stance in asset allocation while being ready to adjust through the year. We expect that select emerging markets debt, of countries with strong financial positions, will become attractive once the dollar weakening trend is confirmed3.
(C) Core (S) Satellite (BC) Becoming core
| Start Cautious |
Amundi Funds Impact Green Bonds |
(C) |
The fund invests exclusively in global green bonds, fixed income securities that direct their proceeds to green projects with measurable and positive impact on the environment. |
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| Start Cautious |
Amundi Funds Pioneer US Bond |
(C) |
The fund employs an opportunistic core fixed income strategy, by investing the majority of the portfolio across a broad range of US fixed income asset classes. |
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| Start Cautious |
Amundi Investment Funds – China RMB Sovereign Bond |
(C) |
The fund provides access to high quality issuers in Chinese fixed income, investing actively in predominantly renmimbi (RMB) sovereign bonds, supranationals and agencies. This asset class is an underexploited area in foreign investors’ portfolios, largely driven by domestic factors and lowly correlated to global bond markets. |
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| Start Cautious |
Amundi Funds Global Aggregate Bond |
(C) |
Leveraging an active and flexible approach, the fund aims to capture opportunities across the broad global aggregate universe; this is enriched by active currency management, which aims to provide an opportunity to generate additional performance. |
Discover fund |
| Start Cautious |
Amundi Funds Pioneer US Short Term Bond |
(S) |
The fund aims to deliver returns in excess of money market funds, by capturing opportunities in the ultrashort duration universe (including at least 80% in floating rate notes or fixed rate with duration less than 1 year)4. |
Discover fund |
| Start Cautious |
Amundi S.F. Diversified Short-Term Bond |
(S) |
The fund seeks positive returns while seeking to take shelter from interest rate risk by investing in highly liquid short-dated corporate bonds with an average investment grade rating5, in a 100% duration-hedged solution. |
Discover fund |
| Start Cautious |
Amundi Buy and Watch products |
(C) |
These funds aim to achieve a predetermined level of income on a regular basis with the secondary objective of capital appreciation over a fixed term horizon, by investing in a diversified* set of bonds intended to be held until maturity, unless credit quality significantly declines. |
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| Start Cautious |
Amundi Structured products |
(C) |
These pre-packaged products are characterised by a specific maturity date and a defined objective. They can represent an efficient opportunity to invest in different market scenarios, thanks to the relative short time to market that allows to tactically benefit from specific market conditions (e.g. attractive yields). |
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Gradually adding risk | ⏰ Q2 2023 → Q3 2023
We believe that the headwinds that have penalised riskier segments of the fixed income universe in 2022 will gradually fade in 2023, when country-specific drivers, especially in emerging markets, will come back into focus. Further, reopening plans in China will likely be another positive catalyst in 20236.
(C) Core (S) Satellite (BC) Becoming core
| Gradually adding risk |
Amundi Funds Emerging Markets Bond |
(C) |
The fund aims to capture opportunities across emerging market debt, a heterogeneous and often unexploited asset class, combining a strong bottom-up stock selection with a dynamic asset allocation to better face different risk environments. |
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| Gradually adding risk |
Amundi Funds Emerging Markets Green Bond |
(C) |
The fund focuses on hard currency emerging markets green bonds, issued primarily by corporates, seeking to capture attractive risk-reward opportunities within both investment grade and high yield segments. |
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| Gradually adding risk |
Amundi Funds European Subordinated Bond ESG |
(S) |
The fund targets superior returns by investing in subordinated bonds issued by high quality investment grade rated issuers we have identified as solid and ESG-conscious. |
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| Gradually adding risk |
Amundi Funds China Aggregate Bond |
(C) |
The fund seeks to capture the full range of investment opportunities across the entire Chinese fixed income space. It is an all-weather solution allocating flexibly in an underexploited area in foreign investors’ portfolios, largely driven by domestic factors and lowly correlated to global bond markets. |
Discover our Best Idea Themes
Equity seeks entry point opportunities
Equity, in our view, will offer attractive entry points during the year, especially in selected regions.
The 60-40 reloaded with an inflation tilt and focus on income
A 60-40 portfolio, that considers inflation and a stable income stream delivery, can represent an advantageous option.
ESG themes & Innovation
ESG and net-zero practices can provide a fertile ground for alpha generation.
*Diversification does not guarantee a profit or protect against a loss.
Sources:
1 Source: Amundi, 2023 Investment Outlook - Some light for investors after the storm, 21 November 2022
2 Source: Amundi, Global Investment Views, January 2023
3 Source: Amundi, 2023 Investment Outlook - Some light for investors after the storm, 21 November 2022
4 Source: Amundi US as of 30 November 2022
5 Over the recommended holding period: 3 years
6 Source: Amundi, Global Investment Views, January 2023
Marketing Communication
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Date of publication: 07 February 2023
Doc Id: 2681175
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