Richard Quin
Bentham Asset Management, a leading specialist global fixed interest and credit investment manager, says 2024 will be a year of transition for fixed income.
“Credit markets will go through some turmoil at some stage during 2024 but we had a very strong year last year, so volatility is to be expected this year,” Richard Quin, Bentham’s Principal and Chief Investment Officer, said.
“Usually, these years of transition lead to better returns and I do think being long interest rate risk will end up being the right call.”
Bentham is forecasting that interest rates have hit their peak, with rate cuts more likely than hikes in 2024, which is good for fixed interest.
“One of the opportunities in the market right now is to use fixed interest and credit to balance your portfolio better. You can get a decent income or return in fixed income without as much downside risk as you would in equities,” Quin says.
Aside from interest rates coming down, Quinn says the biggest risk in the sector right now is geopolitical risk.
“We have a number of wars that are outstanding and a number of elections going on.”
The five biggest geopolitical risks according to Bentham are:
- a divided US
- escalating tensions in the Middle East
- a fractured Ukraine
- unchained AI, and
- the potential rogue alliance of Russia, North Korea and Iran.
“It’s very hard to say whether AI is a very good or a very bad thing. Some of the things that will come through with AI, like an increase in productivity, could lead to lower inflation which is a positive. However, it will also probably lead to quite a bit of disruption in several industries and companies, and possibly even in a number of countries,” Quin said.