Investment Leaders April 2025

The latest policy announcements are signalling a more measured and well-structured rebound, reinforcing confidence in China’s growth trajectory.

After a few good years of equity market returns, recent market volatility has once again heightened investor concerns. It’s a reminder that equity returns, while good over the long-term, can be volatile over the short-term.

Key Takeaways: Uncovering the hidden risks: High-yield credit funds offer attractive returns but come with hidden risks, such as default exposure and liquidity constraints. Not all fixed income assets carry the same level of risk, making due diligence essential. The rise of private credit: As banks pull back on corporate lending, private credit funds are filling the gap. These funds provide varied opportunities, but investors must scrutinise sector focus, loan terms, and borrower stability to avoid potential pitfalls. Balancing risk and stability: A well-diversified portfolio that blends high-yield credit with more stable investments, such as government bonds, can provide resilience and mitigate exposure to volatility.

A key observation from this year’s review cycle has been the low levels of income distributions from Zenith’s International Fixed Interest (IFI) - Bonds universe. Despite the increased attractiveness of bonds and the reflation of real global bond yields, cash distributions haven’t kept up, as investors are patiently waiting for fund managers to “show them the money!”.