Demand for fixed income investments has surged as investors seek to protect income, rebalance portfolios, and capitalise on the evolving interest rate landscape, according to Income Asset Management executive director Cameron Window. Income Asset Management is a financial services firm that specialises in fixed income investments, offering portfolio management and advisory services to institutions and individuals. The company aims to provide clients with stable returns through strategic investments in fixed income securities.
Window noted that fixed income has regained prominence, offering both stability and opportunities amidst growing uncertainty. Investors are increasingly seeking yield and stability as equity valuations appear stretched and term deposit rates decline. He highlighted substantial demand for new fixed income issuances, citing the oversubscription of National Australia Bank’s recent deal as an example.
Australian investors have historically been underweight in fixed income, largely due to a preference for property and equities. According to Window, typical Australian portfolios allocate between 5 and 25 per cent to fixed income, which could potentially reach up to 60 per cent depending on an investor’s risk profile. This under-allocation poses a vulnerability, particularly as geopolitical and market uncertainty intensifies.
With interest rates declining and bond prices rising, the outlook for fixed income remains strong, offering the potential for capital appreciation alongside attractive yields. Window stated that investment-grade portfolios are securing yields of approximately 6 per cent, characterised by good liquidity and low volatility. Higher-risk tolerance investors can see double-digit returns on select opportunities.
