Industry Voice: A Flexible Bond Approach to Help Navigate Volatile Markets

How the T. Rowe Price Funds SICAV–Dynamic Global Bond Fund¹ may help during this challenging environment

clock • 3 min read
Industry Voice: A Flexible Bond Approach to Help Navigate Volatile Markets

Key points

The Dynamic Global Bond Fund delivered a positive return in the first four months of 2022 during an environment of heightened volatility and a heavy sell-off across bond markets.

Fixed income markets have entered a new regime where volatility is likely to be more persistent due to the withdrawal of central bank liquidity support.

Investors should think differently about diversification as the stock/bond relationship is showing signs of changing.

1The fund is actively managed, and the manager is not constrained by the fund's benchmark, which is used for performance comparison purposes only.

This year has been extremely challenging for bond investors, and volatility is set to continue as markets prepare for life without central bank support. We believe this environment will suit our absolute bond return approach, which is flexible, has a strong emphasis on active duration management, and employs defensive hedges to provide diversification against risk assets.

Volatility Is Set to Continue

It has been a tumultuous few months in fixed income, with sovereign bond yields rising sharply and almost every segment of the asset class declining. The unprecedented moves have left many investors questioning how much longer the rout can continue. Although it is difficult to envisage further moves of the same magnitude, particularly in sovereign bond markets, this turbulent period is far from over. If anything, it is only just beginning. We have entered a new fixed income regime as markets prepare for life without the support of central banks.

 

This post was funded by T. Rowe Price

Important Information

For professional clients only. Not for further distribution.

This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.

It is not intended for distribution to retail investors in any jurisdiction.

This material is issued and approved by T. Rowe Price International Ltd, 60 Queen Victoria Street, London, EC4N 4TZ which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only.

© 2022 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.

 

Key points

The Dynamic Global Bond Fund delivered a positive return in the first four months of 2022 during an environment of heightened volatility and a heavy sell-off across bond markets.

Fixed income markets have entered a new regime where volatility is likely to be more persistent due to the withdrawal of central bank liquidity support.

Investors should think differently about diversification as the stock/bond relationship is showing signs of changing.

More on Markets

Industry Voice: PIMCO Secular Outlook

Industry Voice: PIMCO Secular Outlook

Reaching for Resilience

PIMCO
clock 28 June 2022 • 2 min read
Market Movers Blog: S&P 500 slides into bear market

Market Movers Blog: SEC chair Gensler terms bitcoin a commodity

Latest news and analysis

Investment Week
clock 27 June 2022 • 1 min read
David Kimberley is an investment trusts writer at Kepler & Partners

Opportunity amid madness: Valuations more attractive in wake of panic-driven price drops

Buy opportunities have arisen

David Kimberley
clock 21 June 2022 • 4 min read
Trustpilot