You are currently viewing the United States website Institutional website. You can change your location here or visit other RBC GAM websites.
Welcome to the RBC Global Asset Management site for Institutional Investors
In order to proceed to the site, please accept our Terms & Conditions.
This RBC Global Asset Management (U.S.) Website is intended for institutional investors only.
For purposes of this Website, the term "Institutional" includes but is not limited to sophisticated non-retail investors such as investment companies, banks, insurance companies, investment advisers, plan sponsors, endowments, government entities, high net worth individuals and those acting on behalf of institutional investors. The Website contains information, material and content about RBC Global Asset Management (collectively, the “Information”).
The Website and the Information are provided for information purposes only and do not constitute an offer, solicitation or invitation to buy or sell a security, any other product or service, or to participate in any particular trading strategy. The Website and the Information are not directed at or intended for use by any person resident or located in any jurisdiction where (1) the distribution of such information or functionality is contrary to the laws of such jurisdiction or (2) such distribution is prohibited without obtaining the necessary licenses and such authorizations have not been obtained. Investment strategies may not be eligible for sale or available to residents of certain countries or certain categories of investors.
The Information is provided without regard to the specific investment objectives, financial situation or particular needs of any specific recipient and does not constitute investment, tax, accounting or legal advice. Recipients are strongly advised to make an independent review with an investment professional and reach their own conclusions regarding the investment merits and risks, legal, credit, tax and accounting aspects of any transactions.
Over the last few years, fixed income allocations pulled below strategic
weight for many allocators as equity markets kept rising and accommodative
monetary policy pushed yields lower and duration longer. Attractive fixed
income yields were becoming scarcer and fear around what would happen
if rates normalised meant risks in the space were elevated.
Cut to 2022 when central banks began guidance to raise rates and followed
through with action, bond markets sold off aggressively. Clients responded by
reducing duration, moved in favour of floating rate from fixed-rate securities,
and in some cases, moved entirely to cash and cash-plus strategies.
Chart 1: Negative yielding debt has fallen from c.USD24trn to USD4trn in 9 months (to end April 22)
Source: Macrobond, as at April 2022
Fast forward to today, and for the first time in years, high yield (HY) bonds are
offering high yields (some 7.7%1), and investment grade (IG) fixed income has
income to fix (3.9%2). This said, investors are still understandably on the fence
as to whether to re-engage with the asset class.
Fast forward to today, and for the first time in years, high yield (HY) bonds are
offering high yields (some 7.7%1), and investment grade (IG) fixed income has
income to fix (3.9%2).
While macro risks remain elevated, a new challenge has entered the fray –
not owning enough duration against your strategic allocation.
