Australian duration was increased given attractive value at yields near 5% and its potential to outperform if domestic growth slows, while global duration was also increased as AUD-hedged global fixed income now offers a compelling all-in yield of around 5.5%. Although inflation volatility and fiscal discipline remain risks, current yields provide fair compensation, supporting a move closer to neutral.

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‍AB Global Dynamic Fixed Income was trimmed and PIMCO Global Bond was increased, while Yarra Enhanced Income was also trimmed and Western Asset Australian Bond was increased. These changes increase exposure to both global and Australian bonds at a time when yields have become more attractive. Bond yields have risen as markets price in fewer US rate cuts and the possibility of further rate increases in Australia, meaning investors are now being better compensated for holding longer-term bonds. While inflation and interest rate risks remain, current yields provide a more attractive entry point and support a measured increase in both global and Australian bond exposure.