Investors to expect higher FI yields in FY23

Oksana Patron

27 September 2022

Investors can look forward to significant increases in distribution payments in the current financial year, compared with the 2021/22 year, due to a combination of rising interest rates and widening credit spreads, according to Bentham Asset Management.

The firm’s t managing director and chief investment officer, Richard Quin, said that an increase in interest rates combined with an increase in credit spreads can potentially mean an increase in overall yield now available for investors.

“This year’s sudden increase in inflation and rising central bank interest rates have generated negative returns for fixed income markets, but the market is now searching for a top in interest rates,” Quin said.

“Once interest rates have peaked, fixed income returns may offer capital gains as well as higher intertest. Additional and substantial yield is available on corporate bonds and loans.

“Bentham believes the 2022/23 financial year will be exciting. While near-term returns are hard to predict, current high yields will generate above-average returns over the medium term of three to five years.”

Bentham AM released its distribution forecasts for the 2022/23 financial year, with target rates for its range of credit funds ranging from 5% for the Bentham Defensive Income Fund to 8.25% for the Bentham High Yield Fund.