1. Newsroom
  2. Asset TV Masterclass : Fixed Income
Menu
UBP in der Presse 13.09.2019

Asset TV Masterclass : Fixed Income

Asset TV Masterclass :  Fixed Income

With interest rates at rock bottom, bond markets have become very expensive. So why would anybody want to invest in fixed income? Where does the balance between risk and reward lie in these markets and how are central banks responding to slower growth?


Mohammed Kazmi, Portfolio Manager & Macro-Strategist Global and Absolute Return Fixed Income at UBP, recently participated in an Asset TV Masterclass discussing which areas of the bond market still offer some value and opportunities to investors.

Monetary policies still being extremely accommodative, fixed income markets have become increasingly expensive.

"Now that the risk of recession is rising, the question of how value can be extracted from this asset class has become a thorny issue."

says Mohammed Kazmi, along with other industry experts during the Asset TV Masterclass.

Argentina’s liquidity crisis has raised some concerns about the future of emerging economies. Although that crisis is more of a special case than a risk of contagion, Mohammed Kazmi advocates a “wait-and-see mode” on emerging markets. In his view, as we are in this late-cycle environment, it’s not relevant to be long emerging markets across the board. There is a need for being “a lot more selective” and cautious. With data such as exports from Asia and the global PMIs still looking negative, things have to stabilise “before we can see some of these export-orientated economies really starting to perform” again, he states.

The Macro Strategist also points out central banks’ shrinking room for manoeuvre in addressing the global economic slowdown and deteriorating market sentiment. The Federal Reserve has been put in such a difficult situation by President Donald Trump that Chairman Jerome Powell is struggling with his communication, says Kazmi. The 120 basis-point cuts the market is pinning all its hopes on seems a little too much, warns Mohammed Kazmi, adding “we think that the Fed could underdeliver versus market expectations.” Taking into account the fact that the leadership is about to change at the European Central Bank, which adds uncertainty, investors will face further volatility in the coming months.

"Dealing with such an environment requires flexibility."

stresses Mohammed Kazmi.

Liquidity, he asserts, can be optimised within bond funds through CDS indices: “This is one avenue where we can add risk and remove [it] very quickly [and] very easily.” On corporate bonds, Mohammed Kazmi sees opportunities in bank debt. Contrary to common belief, corporate bonds in the banking sector do offer some value, he says. Although Switzerland and Europe have had negative interest rates for a few years now, banks are still providing positive earnings, states UBP’s expert. Their capital ratios have improved significantly and interest margins haven’t suffered too much. Above all, fee income has grown in line with loan books. He concludes:

“There is still a lot of positive you can take from negative yields,”

Global & Absolute Return Fixed Income

Kazmi-Mohammed-150x150px.jpg

Mohammed Kazmi
Senior Analyst Portfolio Manager & Macro-Strategist

Insight

Navigating wealth succession in Asian families

Wealth succession is complex, emotional and can be costly if not managed properly

Read more

Meistgelesene News

UBP in der Presse 07.06.2019

Gold ist eine gute Wahl, das Portfolio abzusichern

Finanz und Wirtschaft - Norman Villamin, CIO Private Banking der Union Bancaire Privée (UBP), rät Investoren, Marktrisiken mit asymmetrischen Anlagestrategien zu begegnen.

UBP in der Presse 30.07.2019

Gewinne mitnehmen oder Korrektur riskieren

Le Temps (29.07.2019) - Nach einem fulminanten ersten Halbjahr dürften die nächsten sechs Monate äusserst spannend für die aktiven Manager werden.

UBP in der Presse 17.06.2019

Investing in disruptive innovation

Forbes Middle East (06.2019) - Whereas the financial markets have always tended to focus on the short term, investors need to think beyond that horizon and look further ahead.

Auch lesenswert

UBP in der Presse 08.10.2019

Cyberschutz als Kriterium bei der Bankwahl?

Le Temps (07.10.2019) - Das Private Banking kann nie ruhen, und seine jüngste Herausforderung ist die Bekämpfung der Cyberkriminalität.

UBP in der Presse 03.10.2019

What investment opportunities do demographic trends offer?

Bilan (02.10.2019) - Climate change, demographic movements, changing consumer behaviour and innovation are transforming our old habits.

UBP in der Presse 01.10.2019

UBP’s Ranjit Khanna speaks to Hubbis

Hubbis (27.09.2019) - Ranjit Khanna is Chief Executive Singapore and Market Head, South Asia, Private Banking at Union Bancaire Privée (UBP), which is enjoying a period of sustained expansion in the region, with assets up more than 50% since 2016.