Maximize the yield opportunity

Outlook 2025Maximize the yield opportunity

2024 saw the end of the US Federal Reserve’s tightening cycle and the beginning of its rate-cutting regime. Despite this shift, bonds still offer historically high levels of income compared to averages over the last 15 years, and we believe they will remain elevated in 2025. These yields can provide an income buffer to help protect against capital loss.

With the Fed’s policy shift and the normalization of the yield curve, investors may want to consider reallocating out of cash and into sustainable higher yields. Investing with a skilled active manager, who can balance finding opportunities with managing risks, can help investors maximize this yield opportunity.

Historically attractive yields

Across most bond sectors, yields remain elevated relative to the past 15 years. Sectors like high yield corporates and municipal bonds offer yields greater than 6%, above long-term averages. This showcases that fixed income continues to offer meaningful income and relatively attractive valuations.

Fixed income yields look attractive across sectors

Fixed income theme supporting chart

*Taxable-equivalent yield assumes 40% tax rate.
Indices used: US municipals represented by Bloomberg Municipal Bond Index; US Treasuries – Bloomberg US Treasury Index; Investment grade (IG) corporates – Bloomberg US Corporate Bond Index; US high yield (HY) corporates –Bloomberg US Corporate High-Yield Index; Emerging markets (EM) debt –Bloomberg EM USD Aggregate Index.
Sources: Morningstar and Macquarie calculations.
Data as of October 31, 2024.

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IMPORTANT INFORMATION

Investing involves risk, including the possible loss of principal.

Diversification may not protect against market risk.

Carefully consider the Fund’s investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Fund’s prospectus or the summary prospectus, which may be obtained by visiting macquarie.com/mam/literature for mutual funds or calling 877 693-3546 Read the prospectus carefully before investing.

Fixed income securities can lose value, including the possible loss of principal. The prices of bonds and other fixed income securities will increase as interest rates fall and decrease as interest rates rise. Fixed income securities with longer maturities or duration generally are more sensitive to interest rate changes. Loans can be difficult to value and less liquid than other types of debt instruments; they are also subject to non-payment, collateral, bankruptcy, default, extension, prepayment, and insolvency risks.

The Bloomberg Municipal Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

The Bloomberg US Treasury Index measures the performance of US Treasury bonds and notes that have at least one year to maturity.

The Bloomberg US Mortgage-Backed Securities (MBS) Index measures the performance of agency mortgage-backed pass-through securities (both fixed-rate and hybrid adjustable-rate mortgage) issued by the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Association (Freddie Mac), and Government National Mortgage Association (Ginnie Mae).

The Bloomberg US Corporate Bond Index is composed of US dollar-denominated, investment grade corporate bonds that are US Securities and Exchange Commission (SEC)-registered or 144A with registration rights, and issued by industrial, utility, and financial companies. All bonds in the index have at least one year to maturity.

The Bloomberg US Corporate High-Yield Index is composed of US dollar-denominated, non-investment-grade corporate bonds for which the middle rating among Moody’s Investors Service, Inc., Fitch, Inc., and Standard & Poor’s is Ba1/BB+/BB+ or below.

The Bloomberg Emerging Markets USD Aggregate Bond Index is a flagship hard-currency emerging markets debt benchmark that includes fixed- and floating-rate US dollar-denominated debt issued from sovereign, quasi-sovereign, and corporate emerging markets issuers.

Past performance does not guarantee future results.

All third-party marks cited are the property of their respective owners.

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