Bond investing in 2025: Keep duration short and look for quality

LAST year, short-duration bonds trumped long-duration securities amid a normalisation of the yield curve, with short-end yields falling by less than initial market expectations, and long-end yields climbing significantly.

Meanwhile, high-yield bond markets outshone their investment-grade counterparts, helped by their shorter duration exposure and continued spread tightening.

For 2025, we continue to advocate a shorter-duration exposure in your portfolio, as investors can continue earning attractive yields here without incurring excessive duration risks. We also prefer higher-quality bonds such as investment-grade ones with attractive yields without going too far down the credit spectrum.