THERE were great expectations for bonds at the beginning of 2023, given the high yields on offer following the rapid rise in interest rates triggered by central banks in 2022.
While many areas of fixed income have not disappointed in terms of generating strong total returns –the coupons paid plus capital gains – it has been the higher-risk parts of this asset class, rather than more traditional safer bonds, that have benefitted most.
What happened? Two things surprised investors in 2023: a stronger-than-expected global economy which, in turn, led to higher-than-expected inflation.
This meant central banks raised interest rates further than expected and any cuts – the market-boosting move...
