Investors: What’s in Store in 2024?

Investors: What’s in Store in 2024?

Joel Colman

Joel Colman  -  26th January 2024

The consensus in the market is that central bank policies are likely to maintain a tight rein over rates during the next two quarters as inflation gradually eases. While the era of zero interest rates is behind us, we’ve arguably shifted towards a period of stability in terms of interest rates.

As a long-term investor, this combination of stability and higher rates offers the potential for improved outcomes, provided your portfolio is diversified. What options do you have to achieve this?

Protect your capital and enjoy regular payments with fixed-income

At Hays Mews Capital Alternative Investment Division, we seek out fixed-income opportunities that offer regular income while protecting your capital.

While we always strive to bring investors a range of opportunities, we like products with a quarterly interest (coupon) payment and the flexibility to reinvest through each quarter. These investments have a maturity of between two and four years – so you receive regular interest payments during this time and repayment of the principal amount at the end of the term.

Of course, nothing is guaranteed in money markets. But we like fixed-income products as they pay a fixed yield over a fixed term. This means that the interest isn’t dependent on prevailing policy interest rates. As a comparison, bear in mind that yields on government and financial-market bonds ebb and flow with underlying interest rates set by central banks.

Allocating a portion of your portfolio to fixed, higher-yielding investments gives you a secure and stable income over a fixed period. And if you reinvest interest payments, you can build on overall capital. Typically, the fixed-income bonds we source diversify your portfolio and offer interest payments of around 12% per annum. Compare that to the major forecasts for 2024 bond yields:

  • The US 10-year Treasury Note is forecast to yield between 3.9 and 4.35%
  • In the UK, the yield forecast for government bonds is lower at 3.5%

We recommend fixed-income opportunities that meet a strict set of criteria

Looking at the underlying rationale for fixed-interest high-yielding bonds, we believe they play an important role in an investment portfolio. When researching fixed-income opportunities, we have a clear and strict set of prerequisites:

  • Experience in international markets spanning the last two decades, where there’s been plenty of variation in conditions across all asset classes
  • A 100% track record on interest payments – demonstrating, amongst other things, that the provider has a clear investment strategy on the underlying portfolio in the bond
  • A fixed return of around 12% per annum – this requires the trading management team to be flexible and adapt quickly to changing market conditions
  • Sound risk management strategies – we look at how the provider diversifies risk and how they blend asset classes, for example, by including commodities, foreign exchange (FX) pairs, indices and equities, and suitable hedging strategies
  • Robust security strategies – to minimise risk for investors

Ultimately, we’re all about bringing you fixed-income opportunities run by experienced teams that deliver stability. Why do we recommend this approach? The goal is to protect and grow your capital and ensure that you’re diversifying your portfolio. Fixed income is sufficiently risk managed to both generate income and help preserve your core capital.

Achieve your 2024 goals with fixed-income opportunities

So, what do we expect to see in the rest of 2024? Market forecasters are predicting stable but subdued economic market conditions – and after the last two years of interest rate increases, inflation has begun to fall back in developed markets, albeit at different rates.

Economic forecasters expect interest rates in developed markets to be maintained during the first half of 2024 before dropping away slightly during the second. However, bear in mind that these figures are based on assumptions that underlying economic growth rates remain consistent with current expectations, including GDP growth of 1-1.5% in the European market and slightly lower in the US.

With those market forecasts as a backdrop, we like to err on the side of caution. As a result, we make sure the fixed-income options we recommend work in both inflationary and deflationary environments. Whichever way the year pans out, a fixed-income opportunity with an income-generating element makes sense.

Joel Colman
Joel Colman

Joel Colman

Co-Founder Director

Interested in finding out more about fixed-income opportunities at Hays Mews Capital Alternative Investment Division? Use the link below to book a chat with me at a time that suits you. It’s free and there’s no obligation or pressure to go ahead.

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