Exclusive: Brown Advisory Optimistic About Fixed Income In 2024

Amanda Cheesley Deputy Editor 29 January 2024

Exclusive: Brown Advisory Optimistic About Fixed Income In 2024

Ryan Myerberg, portfolio manager of the Global Sustainable Total Return Bond Fund at US-based asset manager Brown Advisory, discusses with this news service the global outlook for fixed income in 2024.

Ryan Myerberg, portfolio manager at Brown Advisory, is optimistic about global investment opportunities in fixed income in 2024, after a fabulous rally.

“It’s the time to be back in fixed income,” UK-based Myerberg told this news service in an exclusive interview. “Returns will be quite handsome in 2024 and it’s a great diversifier for equity risk. 2025 will also be a good year." 

Myerberg believes that it’s an opportune time for clients to come out of cash. “Fixed income performs well when equities are down, and many clients are underweight in fixed income. It’s going to be an uncertain year, with questions over a soft landing, recession. It’s a very compelling time to be in fixed income,” he said. He highlighted that many clients are reallocating to fixed income.

Other wealth managers also favour quality bonds in 2024. UK wealth manager Brown Shipley, Paris-based asset manager Carmignac, HSBC Global Private Banking, UBS Global Wealth Management see value in quality bonds in 2024. See more here

Myerberg underlined that the economies of Europe, the US and China are slowing down. “The end has been reached. We’re done with rate hikes. The question is how much will the banks cut rates in 2024. It might start later than expected and not so deep,” he continued.

Myerberg focuses on investing in developed markets at the moment, mainly the US, Canada, the UK, Germany and Spain. But he believes that there are some investment opportunities in emerging markets too. “We are looking at Mexico, Brazil, Indonesia, Poland. We are also looking at New Zealand and Australia,” he said.

Myerberg emphasised how green and social bonds are an important evolution of the market. “We make targeted investments that have a clear impact. He believes it’s important to have strong sustainable factors, and a robust ESG reporting framework. “For instance, we need to ensure energy firms have a clear energy transition in place,” he said. He thinks that the social and green bond market will continue to grow.

He is not alone in his views. David Zahn, head of European fixed income at Franklin Templeton, also believes that sustainable investing will be a dominant investment trend, with structural tailwinds that could help improve financial returns. Zahn sees opportunity in locking-in currently attractive yields with longer-duration assets, such as green and social bonds. See more here. 

Global Sustainable Total Return Bond Fund
Myerberg is portfolio manager of the Irish-domiciled Global Sustainable Total Return Bond Fund (GBP), registered for sale in the UK and Ireland, which invests in sustainable corporate and sovereign bonds and currencies. “We try to invest to generate consistent returns over time, with an investment horizon of five to seven years,” he said.

The fund, which was launched in 2022, aims to target a positive total return (comprising current income and capital gains) above the Bank of England’s SONIA Compounded Index over a full economic cycle, by investing in a broad range of global fixed-income securities and currencies. It is not constrained by any benchmark.

The firm believes that dynamic asset allocation informed by comprehensive top-down macro analysis, combined with rigorous bottom-up security selection and a differentiated sustainable investment approach, can deliver attractive risk-adjusted returns through the economic cycle while producing positive environmental and social impact.

The fund comes under Article 8 of the EU’s Sustainable Financial Disclosure Regulation (SFDR). It aims to invest in companies with measurable ESG outcomes, screening out companies and industries that could have controversial business involvement, using the firm’s qualitative ESG analysis, as well as a third-party provider. It excludes owning bonds issued by firms that defy the United Nations Global Compact Principles and imposes investment guidelines on possible controversies, including weapons, animal testing, fossil fuels, adult entertainment, alcohol, tobacco and gambling.

Forty-three per cent of the fund is invested in developed market sovereign bonds, and 16.9 per cent in developed market investment grade corporate bonds. The fund has strong exposure to the US (30 per cent), the UK (17.5 per cent), the eurozone (13.9 per cent) and Japan (8.3 per cent).

Brown Advisory, which manages a number of US and global equities, and fixed income strategies, has $131 billion assets under management. It also has about $3 billion AuM in its private client business, which has a strong focus on charities and high net worth individuals, trusts with US connections as clients. 

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