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Ways to earn income: 3 tactics to capitalise on rate cut early opportunities

23 Oct 2024

This article is for informational purposes only.

When cash returns are lower, how to enhance income strategies during the early rate cut phrase?

📈 Good Opportunity when the US bond yield rebounds to 4%

Global central banks has begun their rate cut cycles, and the Fed is likely to cut rates further over the next 12 months. Cash returns may fall significantly. While the U.S. 10-year bond yield recently rebounded to 4%, this provides a good opportunity to average into it.

🎯 Make the most of the early rate cut period
Market volatility generally increases ahead and after the US election, and it is necessary to increase deployment to enhance defensiveness. To reference the economic soft-landing periods of 1995 and 1998, bonds recorded positive returns within 12 months after the Fed cut rates for the first time, while the returns in the first 6 months after rate cuts are higher.

📊  Diversify Bond Portfolio

Within bonds, DM high-yield bonds and EM USD bonds had average returns of more than 15% and 26% within 12 months the first rate cut and the economic soft-landing period. The resilience of the U.S. economy supports riskier credit assets. Investment diversification helps to seize economic soft-landing opportunities.

There is more than one way to earn interest. It’s time to seize rate cut early opportunities, explore methods other than cash to maximise returns!

Income-earning ideas for you:

💡 Check out the list of high dividend fixed income funds available on Fund Library:

Fund Select
 UT Code
 Fund Name
 Asset Class
 Last 12 months dividend yield
UT3756 [HY] BGF Asian High Yield Bond Fund A6 (USD) (M Cash Dis) Fixed Income 9.80%
UT3597 Manulife GF Pref Securities Income R (G)(USD)(M Cash Dis) Fixed Income 9.44%
– UT2790 Templeton Emerging Markets Bond A (USD) (M Cash Dis) Fixed Income 8.95%
– UT3726 UBS (HK) Asia Income Bond (USD) A (USD)M Cash Dis Fixed Income 7.85%
UT2412 [HY]AB FCP I Gb High Yld Ptfl AT(USD)(M Cash Dis) Fixed Income 7.15%

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