Reported about 1 year ago
As expected, the US Federal Reserve continued to keep interest rates unchanged on June 14, 2024; however, the European Central Bank (ECB) has already cut rates by 0.25 percentage points, sparking market expectations for a bullish bond market. Experts point out that the average yield of high-grade composite bonds is over 5%, even higher than the 4.5% earnings yield of stocks, presenting a rare investment opportunity. With the market anticipating a US interest rate cut, long-term bond investments are being considered, emphasizing the importance of bond selection given the sensitivity of bond prices to yields. High-grade composite bonds in the US, even in a rising inflation environment, have shown an average annual return of 4.44%, and in times of declining inflation and economy, it can reach up to 11.3%. The Franklin Templeton Select Income Fund is highlighted as an example of a popular overseas investment-grade bond fund with a return rate of at least 8% over the past year and even up to 11%, offering monthly payouts and a diverse asset allocation mainly in US dollar assets. The fund's manager, Sonal Desai, emphasizes a strategy adjusting the bond's maturity period based on market conditions rather than overly optimistic expectations of Fed rate cuts, making it a good choice for investors looking for stable income. Overall, the current high interest rates versus low bond costs market presents a promising investment opportunity, and even if the rate cut is delayed, options with annual return rates exceeding 10% are available, making it a suitable choice for conservative income-oriented investors.
Source: YAHOO