Security Selection Focus
Credit markets, across the board, have a good chance to build on the strong recovery seen since March, and there certainly remains some selective value. Covid-affected sectors could regain ground and those more exposed to growth will benefit if the vaccine roll-out goes well. But there are still plenty of question marks and intermittent setbacks are quite likely.
“We should start to see a clearer picture of which businesses will come through the crisis well, some will benefit due to the changes effected by Covid, but some will struggle,” said Metcalf. “With debt at record highs, a selective and discriminating approach will really be key.”
Houdain said: “The market looks suited for security selection. Areas affected by Covid have good recovery potential, there is some notable value in high yield and emerging markets, while we remain positive on longer-term themes such as real estate, technology and sustainability.”
James Molony is a fixed income specialist at Schroders.
With the arrival of Covid vaccines, there is potential for 2021 to be a much more positive year for the global economy and we could even see a return to more normal levels of activity. This and other factors should see broadly helpful conditions for credit and financial markets.