Annualised performance data in euros at 2nd June 2023

Manager expectations of low neutral rates and a return to near-target inflation reinforce a positive outlook (Pimco)  for core and high quality fixed income. After rising sharply last year, starting yield levels – historically strongly correlated with future returns – for high quality bonds are close to longer-term averages for equity returns, potentially with significantly less volatility and more downside protection than equities. This is helping us to construct prudent, resilient portfolios without relinquishing upside potential. Many Managers have a bias toward high quality, more liquid investments and remain cautious about more economically sensitive areas. They expect increasingly attractive opportunities across private markets over time, particularly in light of the changing banking landscape.

All-in yields are attractive, and the macro backdrop is increasingly supportive. Easier financial conditions, as the Federal Reserve (Fed) pauses, should also support corporate credit.