FAST PODCAST: How to manage fixed income amid rising inflation in 2022 | Pendal Group
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FAST PODCAST: How to manage fixed income amid rising inflation in 2022

Bonds are ready to do their job again in 2022 — but rising inflation means fixed income portfolios will require nuance. AMY XIE PATRICK explains

An excerpt from this podcast

“Bonds in 2022, in our opinion at Pendal, are about ready to do their job again. 

“Bond yields have sold off significantly for Australian governments, especially at the front end of the curve. 

“That means you have a fatter yield cushion to absorb any bumps in the road – be they economic, be they bottom-up scenarios – that may suddenly hit the Australian economy out of left field. 

“So, bonds are ready to exhibit that negative correlation with equity markets. 

“In terms of composing your portfolio, you should be viewing government bonds as providing that defensiveness in your portfolio, as well as providing that extra layer of income to your portfolio. 

“With regard to credit, we are on the side of quality. We prefer investment-grade debt for our income engines. 

“If you are going to stray into higher yielding, higher-risk assets, we would advise you do that always with an eye on liquidity. If I’m going for more risk, can I get out of that risk quickly enough should the macro environment suddenly become more hostile?”


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About Amy Xie Patrick and Pendal’s Income and Fixed Interest team

Amy is Pendal’s Head of Income Strategies. She has extensive experience and expertise in emerging markets, global high yield and investment grade credit and holds an honours degree in economics from Cambridge University.

Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia. Pendal won the 2023 Sustainable and Responsible Investments (Income) category in the Zenith awards. In 2021 the team won Lonsec’s Active Fixed Income Fund of the Year Award.

The team oversees some $20 billion invested across income, composite, pure alpha, global and Australian government strategies.

Find out more about Pendal’s fixed interest strategies here

About Pendal Group

Pendal is a global investment management business focused on delivering superior investment returns for our clients through active management.

Contact a Pendal key account manager here


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