Important Risk Warnings / Disclaimer:

The information provided herein is for general information and reference purposes only and is not intended to provide professional investment or other advice nor is it intended to constitute solicitation, recommendation, or advice. It is not intended to form the basis of any investment decision. Investors should not make any investment decision based solely on the information provided herein. Investors should note that all investments involve risks (including the possibility of loss of the capital invested), prices of fund units may go up as well as down and past performance information presented is not indicative of future performance. Investors should read the relevant fund's offering documents (including the full text of the risk factors stated therein (in particular those associated with investments in emerging markets for funds investing in emerging markets)) in detail before making any investment decision. The information provided herein is based on sources believed to be reliable.

Bonds can help enhance the stability of your investment portfolio

Apart from generating fixed income, bonds can provide investors with a high degree of stability in terms of return, as well as a lower degree of volatility compared with stocks. Given their historically lower price sensitivity to financial market turbulences in comparison with stocks, including bonds in an investment portfolio may help diversify its risk exposure and enhance its performance stability.

Global Bonds – An important asset class component for an investment portfolio

  • Global Bond allocations can offer stable income returns and stronger defence, which may help reduce the overall risk exposure of an investment portfolio amid market volatilities
  • In the past two years, in the face of escalating global trade conflicts, lacklustre economic performance and low inflation, most central banks have resorted to a loose monetary policy, and the low interest rate environment is expected to continue going forward
  • Some members of the US Federal Reserve Board have indicated their anticipations that the benchmark interest rate will remain unchanged in 2020, while emphasizing that the next step for the policy direction will be based on economic data. Currently, yields on the 10-year US Treasury Notes are staying low in range-bound trading, without a clear signal on the way forward. Yet, short duration bonds, with their lower sensitivity to the interest rate direction, may help reduce the volatility impact of such uncertainty on asset prices
  • Global Investment-Grade Bonds have a solid track record on repayment performance, with a less than 0.5% default rate per annum over the past 10 years
  • Against the backdrop of economic uncertainties, some data* show that liquidity is pouring into the bond market, with an inflow of over US$460 billion into corporate bonds, compared with an outflow of over US$160 billion from equities throughout 2019

*Source: BofA Global Investment Strategy, EPFR Global, as of 18 December 2019