Taiwan’s financial advisors are likely to favor bonds over stocks in the second half of this year, even though risky assets might become more attractive due to interest rate hikes by the US Federal Reserve, a survey by JPMorgan Asset Management Taiwan Ltd (摩根資產管理) showed.
A total of 44 percent of financial advisors threw their support behind bond funds, while 21.8 percent said they preferred equity tools, the US fund house’s local branch said in a twice-yearly report.
The remaining 33.7 percent said they were inclined to assign equal weight to bonds and stocks, the report said.
“There was a considerable decline in interest for bonds and a modest gain for stocks after the Fed raised interest rates by 0.25 percentage point in March and June, and it may do so again later this year,” JPMorgan Taiwan vice president Alex Chio (邱亮士) said in the report.
The Fed would move to further normalize its monetary policy as the economy is improving in the US and in other countries, and companies have generally been reporting better earnings abilities, Chio said.
Interest rate hikes tend to propel funds to risky assets in pursuit of higher returns when the world is relatively less volatile.
Against this backdrop, more than 90 percent of financial advisors were upbeat about investment yields in the coming six months, the survey found.
An overwhelming majority, 82.2 percent, expected returns to remain under 10 percent, while 11 percent expected returns of 10 to 20 percent, the report said.
Only 1 percent voiced concerns about losses of more than 10 percent, while 2.4 percent of respondents projected losses of up to 10 percent, it said.
Emerging market bonds were the top choice, garnering 70.9 percent support, followed by high-yield bonds at 52 percent and Asian debt at 8.2 percent, the survey said.
The fund house warned investors about potential corrections across global markets as many have rallied to new highs, Chio said.
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