INVESTING can be challenging and complex, especially during times of high volatility like we are experiencing now.
According to World Economic Forum reports, on the back of the mini-banking crisis, hawkish monetary policy and geopolitical tensions, it can be increasingly difficult for investors to navigate through uncertainty and added risks in their investments.
Due to the unpredictable nature of current economic conditions, fixed income assets are back in the spotlight.
Fixed income assets – also known as bonds – are typically less inherent in volatility and come with a lower risk compared to equities.
This can be vital in an investor’s portfolio, as investing in fixed income assets could help preserve capital and income.
Changing market attitudes
Markets often experience volatility due to shifting market sentiments about economic prospects and financial instability.
This makes the attempts to time market exits and entries costly for investors.
However, a diversified portfolio can help investors establish adequate defensiveness if volatility persists.
Investing in fixed income assets, like bond funds, is one way to achieve this diversification as a bond fund primarily invests in a portfolio of many different fixed income securities.
In this regard, investors can concentrate on funds that provide quality income and exposure to dividend payments.
In anticipation of increased volatility, a considerable number of investors hold more cash than usual.
However, there are indications that rates may have reached their highest points, as policy rates may peak earlier than expected.
As a result of this, investors should either remain invested and diversified or become adequately invested. Additionally, investors should also act swiftly to secure appealing yields and avoid unnecessary deleveraging.
Purchasing quality fixed income funds
Given the potential for attractive yields and possibility of capital gains during an economic downturn, Principal Asset Management Berhad believes that high-quality fixed income presents attractive opportunities for investors.
Furthermore, Principal’s portfolio managers are equipped with the experience to analyse market information before making investment decisions, as well as having the knowledge to research the creditworthiness of bond issuers.
Investors who take an active approach to managing their bond portfolios have the potential to fully leverage these opportunities.
Diversification is a key component of any investment strategy, as it helps to reduce the overall risk of a portfolio.
Investing your fixed income funds with Principal
By adding fixed income investments to your portfolios, investors can balance out the risk associated with equity investments.
Principal’s fixed income products provide the perfect investment alternative, as its products are backed by strong track records and lower volatility.
Below are Principal’s recommended fixed income funds.
Source: Lipper, 26 April 2023.
Note: Past performance is not an indication of future performance. Investment involves risk. Please read our disclaimer before investing.
Principal’s fixed income assets offer:
• A track record of more than 20 years
• Relative outperformance over time
• Optimal risk-adjusted returns
• 90% of the funds within the first and second quartile
And, there’s no sales charge when you invest in the recommended funds.
Given the current market volatility, it's prudent to consider diversifying a portion of your wealth into recommended bond funds for the short term, to help safeguard your capital.
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To learn more about Principal’s fixed income products, visit https://www.principal.com.my/offer/invest-your-wealth/fixed-income/thestar?utm_medium=article&utm_source=the-star&utm_campaign=fixed_income
This article is sponsored by Principal Malaysia.
You are advised to read and understand the relevant prospectus, information memorandum and/or disclosure document including any supplemental thereof and the product highlight sheet (if any) before investing. Among others, you should consider the fees and charges involved. The registration of the relevant prospectus, information memorandum and/or disclosure document including any supplemental thereof and the product highlight sheet (if any) with the Securities Commission Malaysia (SC) does not amount to nor indicate that the SC recommends or endorses the funds. A copy of the relevant prospectus, information memorandum and/or disclosure document including any supplemental thereof and the product highlight sheet (if any) may be obtained at our offices, distributors or our website at www.principal.com.my. The issuance of any units to which the relevant prospectus, information memorandum and/or disclosure document relates will only be made on receipt of an application referred to in and accompanying a copy of the relevant prospectus, information memorandum and/or disclosure document. Please be advised that investment in the relevant unit trust funds, wholesale funds and/ or private retirement scheme carry risk. An outline of the various risk involved are described in the relevant prospectus, information memorandum and/or disclosure document. As an investor, you should make your own risk assessment and seek professional advice, where necessary. Securities Commission Malaysia does not review advertisements produced by Principal.