Good time to lock in higher bond yields, says Franklin Templeton fixed income chief

NOW is a good time to lock in attractive yields in the fixed income asset class, according to Sonal Desai, chief investment officer of Franklin Templeton Fixed Income. This is despite the prospect of a third straight year of negative returns from bonds.

Speaking last week during Franklin Templeton’s Apac Investor Forum in Hong Kong, Desai said US investment-grade credit could yield as much as 6 per cent. Yields exceed 9 per cent when high-yield exposure is added.

“Right now, (investment-grade) credit is a very attractive place to be in fixed income; you’re locking in yields for a longer period of time. Even though we’re not anticipating a dramatic reduction in yields next year... I would encourage people who have the ability to withstand some volatility to start to actively look to other sectors within fixed income markets.”