Guide to riding through US Fed rate cuts

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Chapters

• 00:00 – Introduction
• 01:40 – Historical rate cut cycles & asset class performance
• 04:50 – Why you should reassess your cash vs bonds investments
• 09:42 – What are the risks and returns of fixed income compared to cash?
• 13:26 – How to start investing in fixed income
• 15:36 – When should you move to fixed income?
• 18:20 – Are equities still a better option?
• 24:17 – Q&A: The market is expecting the Fed to cut more, around 200 basis points by next year. How much has this been priced into the bond market?
• 26:46 – Q&A: Is the rate cut bullish or bearish given our current economic climate?
• 30:48 – Q&A: What does locking in bond prices mean? How does it work for bond funds versus individual bonds?
• 36:16 – Q&A: How will a 50 basis points cut and a total of 100 basis points by the end of the year affect technology and Magnificent 7 stocks? How about small caps?
• 39:21 – Q&A: Are REITs already overpriced? Which REITs are good to invest in right now?
• 41:06 – Q&A: What is the outlook for private credit given the rate cut?
• 44:19 – Q&A: With further cuts into 2025, how does that impact dividend stocks?
• 46:06 – Q&A: How will the Fed's expected rate cuts into 2025 impact the 30-year bond price?
• 49:00 – Q&A: Is it still good to buy bonds given high long-term interest rates due to decoupling, budget deficits, and de-dollarization?
• 50:39 – Q&A: How would you position the Passive Index Collection against other Fund Smart fixed income funds presented earlier?
• 52:09 – Q&A: Investment-grade and high-yield spreads are trading tight. Would you still encourage investors to long bonds?
• 54:38 – Q&A: Is it better to buy US government bonds or investment grade corporate bonds?
• 57:10 – Q&A: How should Singapore-based investors think about US dollar weakening?
• 58:52 – Q&A: Do we foresee the default rate rising in private credit?

About the session

The US Federal Reserve had signalled that the “time has come” for rate cuts. After Jerome Powell’s speech at Jackson Hole, and with the latest lacklustre Job Report, the central bank seems fairly set to transition from a pause to a cutting mode, starting from September.

The speculation around the Fed funds rate has since moved from the question of “when” to “how much”, as the assessment of job-market health will be key to how big an interest-rate cut the Fed delivers. Our Investment Office has devoted attention to analysing the historical patterns of the Fed cycles and their effects on the market. Still, every cycle is unique and expectations of markets often go differently. 

On 19 Sep, the day after the FOMC meeting, Hugh Chung, Chief Investment Advisory Officer, and Yulin Liu, Investment Lead at Endowus,  discussed the implications of a rate cut now and how investors should be positioned in a live webinar. ‍

Topics discussed:

1. The Fed’s policy decision and its implications for investors.
2. Historical references and investment opportunities in a rate-cutting cycle
3. Ways to strategically optimise your cash and fixed income portfolio
   

About the speakers

Hugh Chung, Chief Investment Advisory Officer, Endowus

Hugh Chung is the Chief Investment Advisory Officer at Endowus, Asia’s leading digital wealth platform. 

In his current role, Hugh leads the integration of investment functions and strategies across the Endowus Group, comprising the Endowus digital platform, Endowus Private Wealth, and Carret Private. He oversees the centralised Investment Office, which provides group strategic direction on the expert curation and management of all investment solutions across public and private markets, for individual and institutional investors in Singapore and Hong Kong. 

Hugh has more than 20 years of experience in the asset management and financial advisory space in Asia. In his previous role as the Chief Investment Officer for a single family office, he was responsible for strategic asset allocation, portfolio construction and fund selection across all regions and asset classes. Hugh was also previously Managing Director at Kadensa Capital and Azentus Capital as the founding member and senior investor of two of the most successful hedge fund launches in Asia. Before this, Hugh had oversight of Korea equity distribution at J.P. Morgan, and began his career at Goldman Sachs and Samsung Securities.

Yulin Liu, Investment Lead, Endowus

Yulin Liu is the Investment Lead at Endowus, where she focuses on investment due diligence and leads the fixed income group, curating a diverse range of offerings.  She is also an active member of the ESG working group.

Prior to her current role, Yulin was with AQR Capital Management, where she supported major institutional investors across Asia in their investment and portfolio monitoring needs. Yulin holds a Masters in Financial Analysis (Distinction) from London Business School, and a MEng in Engineering, Economics and Management (First Class Honours) from the University of Oxford.