The investor benefits from diversification without active management decisions. The bond market today is a landscape in flux, reshaped by growing concerns over inflation and its far-reaching implications. Investors, attuned to the whispers of economic change, are adjusting their sails as fears of rising prices cast a shadow over expectations. This shift isn’t just a fleeting reaction—it’s a fundamental rethinking of how bonds, long seen as a cornerstone of stability, fit into a world where inflation looms large.

Viewpoint, by Edward Glyn, Head of Global Markets, Calastone

• Investors can buy individual bonds across various sectors and hold them to maturity, but for most, that’s impractical.
• Softer data in the United States and news that Microsoft may be canceling some of its data center leases caused a sell-off in the S&P’s largest sector (tech, at 30% of the index).
• “Without FEMA’s backstop, investors might look at climate risk very closely,” Doe added.

As such, the Cap is likely to change, sometimes significantly, from one Hedge Period to the next. TIPS can provide investors a hedge against inflation, as the inflation adjustment feature helps preserve the purchasing power of the investment. Because of this inflation adjustment feature, inflation protected bonds typically have lower yields than conventional fixed rate bonds and will likely decline in price during periods of deflation, which could result in losses. Government backing applies only to government issued securities, and does not apply to the funds.

Navigating the New Normal in Bond Markets: Expert Strategies for Investors

If market volatility leaves you wanting to press the eject button, consider ETFs designed to protect on the downside so you can stay invested for the long run. Paula said that as she and her husband continue to monitor their retirement accounts, their biggest fear is how Trump’s policies could impact the quality of the rest of their lives — and when their funds will run out. He said he hoped the last few days of stock market turmoil would motivate lawmakers to put more checks and balances on the president. China now plans to raise $830 million in funding from its inaugural issuance of green bonds, a move hailed as “positive” by experts. A green light for Republican leaders to double down on attacking climate-related investments, especially those tied to cutting emissions or pushing for cleaner energy. “You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time,” the Fitch economist said.

Investors must carefully balance exposure across different high-quality sectors to manage risk and optimise returns. Between January and November 2024 $2.9bn was withdrawn from ESG equity funds on our network, even as investors added a net $6.4bn to funds not making any ESG claims. While European and Asian investors have withdrawn capital from ESG equity funds while at the same time adding it to non-ESG funds, in the UK, investors have added to both. In Australia, where equity funds overall have seen the extremely low inflows this year (just $248m) after outflows in 2023, ESG funds have seen net subscriptions while conventional equity funds have seen redemptions.

Interest rate cuts are likely navigating a changing bond markets to continue, though more slowly than some had initially hoped, while geopolitical and trade concerns remain heightened. The global economy is seeing a slowdown at present though most observers are relatively relaxed that it will avoid a hard landing. None of these companies make any representation regarding the advisability of investing in the Funds.

Floating Rate Bonds: Riding the Interest Rate Waves

The last two years have seen UK investors turn decisively against mixed assets, however, perhaps because bond and equity-market correlation means they have not fulfilled their traditional diversifying role. Australian investors have more in common with their British counterparts than their Asian neighbours. There can be no guarantee that the Buffered Funds will be successful in their strategy to provide downside protection against Underlying ETF losses. In the event an investor purchases Fund shares after a Hedge Period begins or sells Fund shares prior to the end of the Hedge Period, the returns realized by the investor will not match those that the Funds seeks to provide. In periods of extreme market volatility, the Funds’ return may be subject to downside protection significantly lower than the Buffer and an upside limit significantly below the Approximate Cap (the “Cap”). A new Cap is established during each Rebalance Period and is dependent upon current market conditions.

The mood is one of caution, curiosity, and recalibration as the market navigates this new terrain. You should carefully consider your needs and objectives before making any decisions. For additional guidance on how this information should be applied to your situation, you should consult your advisor. We believe the information contained in this material to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions and are subject to change without notice. Rotating from cash to a short-duration municipal bond or investment-grade corporate strategy both pays a yield premium over cash and offers hedging from slower growth.

Silver Market Trends and Investment Opportunities for 2025

• We estimate that fund flows accounted for around a third of the AUM increase in 2024.
• As diversification has come back into focus, today’s note focuses on global equities and fixed income.
• Asian investors have also tended towards mixed assets and preferred them decisively in 2024, consistent with their anti-equity, pro-bond stance.
• Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida.
• Remember that TAA should align with individual risk tolerance and investment goals.
• When you look at an investment of $10K in stocks over a 20-year period, an investor who stayed invested would have made 58% more than one who missed just 5 top-performing days.

However, this is because the shock we experienced in markets over that period was an inflation shock. As the name suggests, your income is “fixed,” and if prices are rising simultaneously, then all else being equal, your purchasing power has eroded. This is why we have advocated for adding resilience to portfolios to hedge from inflation through assets such as real estate, infrastructure, structures and gold. Investors have pushed back against fixed income because its correlation with equities has risen over the last two years, meaning that fixed income isn’t “zigging” when equities are “zagging” as it has in the past. However, that’s because the shock we experienced in markets over that period was an inflation shock.

Morgan Securities LLC Form CRS and Guide to Investment Services and Brokerage Products. Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request.

Even without the exceptionally positive contribution of the Magnificent 7 tech companies, the US market has set the pace over the last year. Net fund flows can seem very large, but they are in fact just the very small residual difference between enormously large volumes of buying and selling. Since the beginning of 2019 we have processed $6.07 trillion of orders in equity, bond and mixed asset funds, but net inflows have been more than twenty times smaller at just $276 billion. In equity funds alone, net inflows have equalled just 1.5% of the asset class’s $3.29 trillion total trading volume across our network in the same period. Calastone is the largest global funds network, connecting the world’s leading financial organisations.

They offer potential for capital appreciation while providing downside protection. In a volatile market, convertibles can be a valuable addition to a diversified portfolio. In a rapidly changing market, active management becomes crucial.

For the time being, analysts anticipate bond yields to continue under pressure. If global trade tensions escalate, demand for safe-haven assets such as U.S. This might drive the 10-year Treasury yield even lower in the near term. Investors pulled money into bonds, which drive yields down because of the spread of trade war. It confirmed that markets view these policies as a significant risk factor.

She delivers insightful, actionable content to empower professionals and entrepreneurs. The White House maintains the new tariffs are needed to defend American industries. Many worry that this action could trigger retaliatory measures by major U.S. trading partners.

This strategy helps manage interest rate risk while providing a consistent income stream. Reinvesting maturing bonds at prevailing rates can enhance returns over time. Convertible bonds provide a unique blend of fixed-income and equity features.