2019 was a good year for fixed income investors globally. According to data from CBRates (a central-bank tracking service), 56 central banks cut rates 129 times in 2019. Monetary policy was loosened in major economies such as the U.S. and the Eurozone, as well as the biggest emerging markets, such as China, India, Russia and Brazil. This monetary easing, which was the opposite to what economists anticipated at the start of 2019, pushed interest rate expectations significantly lower — a shift that prompted a positive re-pricing of the global bond market. Twenty years ago, well over half of the global bond market boasted yields in excess of 5%. Today, that proportion has reduced to 3% - the lowest share on record (according to ICE Data Indices).

The Marriott Global Income Fund produced a return of 0.9% for the year ending 31 December 2019. This relatively subdued return may be attributed to the conservative positioning of the fund (low modified duration), as well as the Rand strengthening by approximately 2% against the US dollar in 2019. From a long term perspective, we prefer floating corporate debt over long dated fixed rates government bonds to ensure relative capital stability in the event of an upward shift in the yield curve – a highly likely scenario considering historically low bond yields.