The Capital Group Fixed Income Horizons Survey, conducted among 300 investment professionals across Asia-Pacific, Europe and the Middle East and North America, examined how institutional asset owners are positioning fixed income portfolios over the next 12 to 24 months.

“Fixed income is increasingly being used to stabilize portfolios as uncertainty persists," said Manusha Samaraweera, fixed income investment director, Capital Group. “Our Fixed Income Horizons Survey shows a growing focus on geographic diversification and portfolio flexibility, particularly among EMEA and Asia-Pacific investors, as they look to reduce concentration risk,” he continued. “Asset owners are also evolving their investment approach to give managers greater scope to respond to market change. As one of the world’s largest active fixed income managers, we believe actively managed, well-diversified global portfolios can help investors navigate shifting market conditions and build more resilient portfolios over the long term.”

Key findings
Agility and diversification rise as uncertainty persists. Adjusting credit portfolio composition and geographical diversification are top priorities for most asset owners over the next 12 months. 

Two thirds are prioritizing changes to their investment approach to increase agility, most commonly by increasing tactical asset allocation limits.

Forty six per cent are increasing the use of active management within fixed income, while just 5 per cent are decreasing this, underscoring the growing emphasis on flexibility.

Investors are increasing liquid fixed income exposure: liquid fixed income allocations are trending up over the next 12 months: 31 per cent plan to increase ; 20 per cent plan to decrease .

Key drivers are diversifying equity risk and defensive positioning 59 per cent.

Demand is rising for investment grade corporate credit and emerging market debt – both higher than 2025.

IG credit sees gains for Europe and Asia-Pacific as core asset owners plan to increase allocations to European and APAC IG credit than US IG credit over the next 12 months, reversing last year’s trend.

Home bias persists, but cross-regional interest is building compared with 2025: EMEA is adding APAC allocations , APAC is adding Europe , and North American investors are adding European allocations .

EMD demand is reaching new highs: nearly twice as many investors plan to increase EMD allocations compared with last year , driven by expectations of diversification benefits and yield premium.

Over three-quarters expect real yields in EMD sectors to remain stable or rise over the next 12 months, suggesting continued attractiveness compared with developed market credit. 

Private credit demand remains robust
Private credit remains the most popular credit sector for increased allocations, with 34 per cent planning to increase exposure over the next 12 months.

A majority of asset owners now say that private credit makes up 10 per cent or more of their fixed income allocations, up from 39 per cent in 2025. 

“As dispersion increases across regions and credit sectors, many investors are using active management to navigate shifting correlations and uncover resilient sources of income. Our study highlights a shift toward fixed income, alongside renewed interest in investment grade credit and emerging market debt,” Toby Chan, head of client group, Hong Kong and Greater China, Capital Group, said. “Against this backdrop, a globally diversified and actively managed approach to fixed income is a way to maintain flexibility in uncertain conditions.”

As Capital Group approaches its 100th anniversary in 2031, its long-term strategy remains rooted in its mission to improve people’s lives through successful investing. With over 9,000 associates and 33 offices around the world, Capital Group manages $3.3 trillion in assets for millions of wealth management and institutional clients worldwide.