Favouring securitized sectors

In late October 2022, the 10y-3m Treasury yield curve inverted for the first time since 2019 and continued to invert further through November. This has left investors contemplating a recession and wondering how to position their portfolios going into 2023. In our view, inversion has historically been a signal to favor fixed income over equities until the equity market reaches a bottom.

Considering the yield curve is presently deeply inverted, we believe there may be opportunities for core investment-grade fixed income to outperform equities as the economic cycle unfolds.

In addition to rotating into bonds, investors might also want to pay attention to positioning within their fixed income allocations. In a nutshell, we favor high-quality investment-grade bonds at this time. 

Volta Finance Ltd (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.

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