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Fixed income: what are the short-term strategies to favor?


Short-term strategies could make the difference in a context of interest rates uncertainties

Since 2011, due to the very accommodative monetary policy of Central Banks around the world, investors have been facing low interest rates, particularly in Europe.

In this context, investors may want to consider short term strategies, if they believe that:

• 2018, will be a year of transition in the financial markets, before entering a new investment cycle and the possibility of re-building of risky assets premiums, or
• Central Banks will accelerate the normalization of their monetary policies, due to higher inflation expectations.

In other words, even if the path and timing remains ambiguous, we could face some spikes in volatility in 2018. In that scenario the question should not be what was a portfolio’s investment record, but rather how will performance be achieved now, in this new cycle?

In the case where the world doesn’t change in 2018, investors will continue to have to live with low interest rates and will want to find alternatives to very low money market rates (EONIA index stands at -0.35% as of end of December).


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