Fixed Income in an age of longevity Luc Froehlich, CFA, CAIA Global Head of Investment Directing Fixed Income Fidelity International
Act I - The Diet
Consistency Total returns of equity and bond of CIFI Holdings Group 175 Rebased to 100 160 Total return (equity): +15.0% 145 130 115 100 Total return (bond): +11.2% 85 70 55 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 CIFIHG Equity CIFI HLDGS 7.75% 6/5/20 RGS Source: Fidelity International, Bloomberg, as of 21 June 2019. References to specific securities are for illustrative purposes and are subject to change without notice. They should not be taken as a recommendation or advice to transact in them. Past performance is not a reliable indicator of future results.
Consistency Liquidity solution vs Asia Equity and Asia High Yield 115 Rebased to 100 110 105 100 95 90 85 80 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 APAC Equity Asia Bonds HY Fidelity Enhanced Reserve Fund (gross) Source: Fidelity International, Bloomberg, as of 30 September 2019. *Fund launched on 26 March 2018. Performance returns on a NAV-NAV basis with dividends reinvested in USD terms of the A-ACC-USD share class. Asian Bonds HY: ICE BofAML Asian Dollar High Yield Index. APAC Equity: MSCI AC Asia Pacific Index. The Fund does not have a benchmark. Past performance is not an indicative of future performance
Timing the market S&P 500 3500 3000 2500 2000 1500 1000 500 0 Mar-68 Mar-72 Mar-76 Mar-80 Mar-84 Mar-88 Mar-92 Mar-96 Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Source: Fidelity International, Bloomberg.
Time in the market Fixed income to increase portfolio longevity Total portfolio distribution 1000K 2000K $1,813,985 $1,520,702 800K 1500K $1,282,594 600K 1000K 400K 30.0 years 500K 200K 26.5 years 23.4 years 0K 0K 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 High Volatility Mid Volatility Low Volatility High volatility Mid volatility Low volatility Source: Fidelity International, Goldman Sachs Research; High volatility portfolio: 85% Global Equity, 15% Global Fixed income; Medium vola: 70/30; Low vola: 55/45
Act II - The Balance
Striking an optimum: income vs volatility Asia High Yield returns 10% Volatility (*) : 6.8% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 1Q 10 1Q 12 1Q 14 1Q 16 1Q 18 Income return Capital return Source: ICE BofAML Asian Dollar High Yield Index and Asian Dollar Investment Grade Index, as of 30 September 2019. Past performance is not a reliable indicator of future results. (*) Annualised capital volatility is calculated based on quarterly capital return.
Striking an optimum: income vs volatility 70% Asia High Yield and 30% Asia Investment Grade Return 10% 8% Volatility (*) : 5.5% 6% 4% 2% 0% -2% -4% -6% -8% -10% 1Q 10 1Q 12 1Q 14 1Q 16 1Q 18 Income Return Capital Return Source: ICE BofAML Asian Dollar High Yield Index and Asian Dollar Investment Grade Index, as of 30 September 2019. Past performance is not a reliable indicator of future results. (*) Annualised capital volatility is calculated based on quarterly capital return.
Act III - The Token
Tokenisation simplified 01010101 01010101 • $ • 01011001 01011001 10011100 10011100 00100100 00100100 Company Smart Smart Digital information placed contracts coded on contracts coded on form of the on blockchain blockchain blockchain real asset Source: Fidelity
Fixed Income in an age of longevity Diet: Consistency + Time in market = Wealth build-up Balance: Income + Total return = Optimal allocation Token: Infrastructure + Mindset = New asset classes
Fixed Income in an age of longevity Diet: Consistency + Time in market = Wealth build-up Balance: Income + Total return = Optimal allocation Token: Infrastructure + Mindset = New asset classes
Important information This document is for intermediaries only and not for external distribution. All external distribution requires prior written approval from Fidelity. FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity International. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. The information contained in this material is only accurate on the date such information is published on this material. Opinions or forecasts contained herein are subject to change without prior notice. Reference to specific securities mentioned within this material (if any) is for illustrative purpose only and should not be construed as a recommendation to the investor to buy or sell the same. Investment involves risks. Past performance is not indicative of future performance. Please refer to the relevant offering documents for further information including the risk factors. If Investment returns are not denominated in HKD/ USD, US/HK dollar-based investors are exposed to exchange rate fluctuations. This material may contain materials from third parties which are supplied by companies that are not affiliated with any Fidelity entity ("Third Party Content"). Fidelity has not been involved in the preparation, adoption or editing of such third party materials and does not explicitly or implicitly endorse or approve such content. Any opinions or recommendations expressed on third party materials are solely those of the independent providers, not of Fidelity. Third Party Content is provided for informational purposes only. The material is issued by FIL Investment Management (Hong Kong) Limited and it has not been reviewed by the Securities and Futures Commission (“SFC”).
Recommend
More recommend
