Is a golden era for income investors coming?

Fixed income has had a torrid time of it the last year – in fact, by some measures it’s been the worst year on record – with US treasuries losing about a tenth of their value.

Since the beginning of this year, global bonds have recorded their worst performance on record, with the Bloomberg Global Aggregate Total Return (USD) Index down around 10% year to date – equating to $3.76 trillion in lost value.

This performance has also coincided with a sell-off in global equities, with the MSCI World Net Local Total Return Index down around 21% over the same period.The last time that we saw a multi-month sell-off in both global equity and bond markets was in 1994 – a time when the Federal Reserve also had to sharply reverse policy.

But if you’re thinking about selling out of fixed income – think again. Crystallising a loss by panic selling may be the worst thing you can do.

Joining us for today’s episode of The Rules of Investing is Andrew Canobi, director of Australia Fixed Income at Franklin Templeton. He’s been in the role since 2014, and is responsible for steering macro strategy, credit research, and fixed income portfolio construction. Prior to that, Andrew was director and portfolio manager for Deutsche Asset & Wealth Management. He also had stints at Invesco and ABN AMRO.

What goes up must come down, and as Andrew explains, yields can only go so high, so we mightn’t be very far from a golden era in fixed income.

He also gives us his take on the inflation cycle, why we should take our cues from the market rather than central bankers, and where the best value exists in fixed income.

This episode was recorded on June 18, 2022.

Timestamps

1:20 – Are markets at DEFCON 1?

2:25 – Will central banks do too much or too little?

3:30 – Should we take cues from central banks or the market?

8:00 – How is supply side inflation tamed by killing demand?

10:00 – Is Australia’s housing market the joker in the pack?

14:00 Why fixed income is still a good investment

20:45 – A corner of the fixed income market investors don’t know about

22:20 – Investing in overseas bonds

26:00 – 3 favourite questions

Rules of Investing

Jul 22, 2022 • 31m

1x speed

Other episodes

Bob Desmond names his ”forever” stock

We're constantly told that diversification is the only free lunch in finance. Yet most of the world's top investors choose not to eat it.
Warren Buffett, Charlie Munger, John Maynard Keynes, Lou Simpson, George Soros. All run concentrated portfolios...

285 downloads Rules of Investing Sep 15, 2023

44m

Trailer: Bob Desmond, Claremont Global

We're constantly told that diversification is the only free lunch in finance. Yet most of the world's top investors choose not to eat it. Warren Buffett, Charlie Munger, John Maynard Keynes, Lou Simpson, George Soros. All run concentrated portfolios....

286 downloads Rules of Investing Sep 13, 2023

3 reasons why the US economy has achieved a miraculous ”soft landing”

Ten years ago, investing was an easy game. Thanks to rates near zero and reckless fiscal spending, markets were drunk on liquidity.
There was multiple expansion across the board, and winning was relatively easy. Pick an index, sit back and let multip...

373 downloads Rules of Investing Aug 25, 2023

38m

Blackwattle’s Ray David is raising red flags about market darling CSL

There are a select few stocks on the ASX that boast true market darling status. Whereas other stocks sell off at the hint of bad news, market darlings seem to emit an aura effect on markets that itself attracts investment.
Biotech company CSL is argu...

368 downloads Rules of Investing Aug 18, 2023

44m

Trailer: Blackwattle’s Ray David is raising red flags about market darling CSL

Hello and welcome to the Rules of Investing, brought to you by Livewire Markets, I’m your host David Thornton.
On the upcoming episode I sit down with Ray David, Portfolio Manager and Partner at Blackwattle Investment Partners. Alongside Joseph Koh, ...

351 downloads Rules of Investing Aug 16, 2023

Livewire Live is back in 2023!

Livewire Live is an investor event like no other where Australia’s most experienced investors will debate the critical topics in markets right now.
It is set to be an unmissable event with an exceptional lineup of speakers and innovative formats. Tic...

367 downloads Rules of Investing Aug 16, 2023

What do counting cars and delivering an 18% pa return for investors have in common?

There is a good reason why Australia’s sovereign wealth fund, the Future Fund, maintains a 16% allocation to private equity. Returns, returns, returns.
Private equity, and the lucrative returns it offers, has traditionally been the restricted domain ...

431 downloads Rules of Investing Aug 11, 2023

45m

Regal’s ultimate guide to microcap investing in 2023

If there is one request that we repeatedly receive from our audience, it’s that you want more content on the wonderful, often under-covered world of microcaps.
It makes cents (literally). These stocks usually fly under the radar of the masses, provi...

278 downloads Rules of Investing Aug 04, 2023

39m

Trailer: The ultimate guide to microcap investing in 2023

In the upcoming episode of The Rules of Investing, we're joined by microcap expert Jessica Farr-Jones, the portfolio manager of the Regal Emerging Companies Strategy*.
She shares why she is feeling bullish about the opportunity in small and micro cap...

361 downloads Rules of Investing Aug 02, 2023