Charles Ross, CEO of Sterling Asset Management, says in light of the U.S. Federal Reserve’s recent shift to a more cautious approach, new bond investments which carry higher yields remain the strategic recommendation for the firm going into 2024.

Speaking at the company’s annual investor briefing, Ross discussed the firm’s performance for the 2023-2024 financial year. Drawing on over two decades of expertise in handling U.S. dollar investments, Ross began by acknowledging the challenges faced by Sterling Asset Management throughout the past year. He highlighted the oscillating investor sentiment, swinging between optimism and pessimism, and the Federal Reserve’s persistent efforts to counter inflation through interest rate hikes.

“Despite these challenges, Sterling Asset Management’s capital base demonstrated remarkable resilience,” declared Ross.

He explained that the impact of rising interest rates on the market-to-market effects of securities had been effectively managed by the firm. According to Ross, the Federal Reserve’s recent shift to a more cautious approach, putting a hold on further rate hikes, was a positive development for investors.

Ross, expressing optimism about the future, said: “We firmly believe that the Federal Reserve’s interest rate hikes are behind us. This creates an advantageous environment for investors to capitalise on the issuance of new securities, which carry substantially higher yields compared to maturing ones and those being called.”

The strategic recommendation from Ross was clear: focus on bond investments.

“Significant portions of our finance portfolios are invested in bonds, scheduled for redemption between now and the upcoming year. This trend is expected to continue, providing lucrative opportunities for attractive yields and favourable prices, along with the potential for both capital gains and substantial income throughout 2024,” he continued.