CIO Insights Resilience versus recession Active bond portfolio management remains the watchword in 2023, coupled with the dynamic management of maturities and default probabilities (i.e. ratings). Floaters – bonds with variable returns – might be useful here. Investors who are willing to take risks might also be interested in exploiting possible exchange rate differences. 2023 will give bond market investors no cause to relax. On the other hand, high quality bonds offer decent yields again which could compensate for the risk of further rate rises. The ongoing hit from inflation and interest rate rises has been too severe for the situation to calm down quickly, but valuations look more favourable now. Bonds: approaching equilibrium Market and portfolio implications: o The situation may calm down slightly in 2023 but the risk of volatility remains o Focus on liquid investments and good credit ratings o Active portfolio management remains the watchword for investors In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not the case in the U.S. No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Inflation will have a negative impact on the purchasing power of this nominal monetary value. Depending on the current level of inflation, this may lead to a real loss in value, even if the nominal performance of the investment is positive. Investments come with risk. The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk. This document was produced in December 2022. 11