Livewire Income Series: Who wins the income battle: bonds, private credit or equities?

Three income managers. Three different approaches. One shared belief - investors have more options than ever.

Please note, this interview was recorded Tuesday 19 May, 2026

‍One of the privileges of my role is interviewing dozens of income managers every year. One of the challenges is that they're all convinced - as they should be - that their asset class is the best place to be.

Bond managers will tell you yields have not looked this attractive in years. Private credit managers will point to contractual income streams and lender protections. Equity investors will argue that growing dividends remain the best defence against inflation.

Usually, they cannot all be right.

That is why I was interested in hearing how Adam Bowe from PIMCO, Andrew Lockhart from Metrics Credit Partners and Matthew Haupt from Wilson Asset Management would answer the question, 'What is the superpower of your asset class over the next couple of years?'

Their responses revealed three very different ways of thinking about risk, return and income generation.‍

"The potential for equity-like returns with a third to half the volatility would be the superpower." – Adam Bowe

"The ability to originate transactions, and be able to structure those transactions to mitigate risk and to drive an equity-like return." – Andrew Lockhart

"Having that flexibility to deliver through all parts of the cycle." – Matthew Haupt on the WAM Income Maximiser, which combines both equity and debt

The discussion that followed was less about declaring a winner and more about understanding where the opportunities lie. Whether through bonds, private credit or flexible income strategies, all three managers believe investors have more options than they have had in years to generate attractive income without taking disproportionate risk.

INTERVIEW SUMMARY

Why flexibility matters more than ever

Haupt's outlook centred on the increasingly concentrated nature of equity markets.

"We're in a momentum-driven market," he said, pointing to investor crowding around artificial intelligence, semiconductors and other perceived safe havens. In his view, uncertainty is causing capital to flow into a narrowing group of winners, creating both opportunities and risks.

That backdrop has reinforced the value of flexibility. Unlike managers restricted to a single asset class, Haupt argued that the ability to allocate between equities and fixed income provides a significant advantage. As valuations become stretched in some parts of the equity market, attractive opportunities are emerging elsewhere.‍

"We have flexibility where we can move in equities and into debt where we need to," he said.

That flexibility is already influencing portfolio positioning. While Haupt remains constructive on selected equity opportunities, particularly within the energy sector, he acknowledged that some fixed income markets now offer compelling value.

His highest-conviction equity opportunity currently is in energy. Following years of underinvestment and the drawdown of strategic reserves, he believes the sector could benefit from a multi-year restocking cycle.‍

"Energy stocks will have high free cash flow and they'll maintain their dividends," he said.

The opportunity in Haupt's view, however, is not confined to a single asset class. It comes from being able to shift between equities and debt as relative value changes.

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Bonds are no longer the portfolio afterthought

Bowe's argument ultimately comes back to where yields start today. Many investors still associate bonds with the painful experience of 2022, when rising interest rates triggered one of the worst periods for fixed income in decades. Bowe believes that comparison is increasingly outdated.‍

"It's an asset class that probably hasn't looked this attractive in terms of valuations in 15 years or more," he said.

The key difference is starting yields. Today, investors can access traditional fixed income portfolios yielding 6-8%, while government bonds, state government debt and high-quality global credit all offer materially higher income than they did only a few years ago. For Bowe, that creates an unusual combination of income and capital return potential.

Importantly, he argued that investors should not expect a repeat of 2022. Inflation remains a risk, but markets have already repriced significantly and yields now provide a much larger buffer against future volatility.

Bonds also retain another advantage that many investors overlook - diversification. If risk assets experience a meaningful drawdown, high-quality fixed income is one of the few asset classes that may actually benefit.

That combination of income, liquidity and portfolio protection explains why Bowe believes bonds deserve renewed attention from income investors.

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Private credit's edge

For Lockhart, the attraction of private credit lies in something public markets cannot easily replicate - direct origination.

Rather than buying securities over a screen, private credit managers negotiate directly with borrowers, structure transactions, set covenants and establish protections designed to preserve investor capital.‍

"The key strength in private credit is that closeness to the borrower," Lockhart said.

That process creates multiple levers for managing risk while also enhancing returns.

Metrics continues to see significant opportunities across the Australian credit market, particularly within real estate debt, where Lockhart believes returns remain attractive relative to the risks being taken.

Importantly, he argued that investors often underestimate the protections available to lenders. Unlike equity investors, private credit providers sit higher in the capital structure and can negotiate terms designed to protect their position if conditions deteriorate.

The result is an asset class capable of generating strong income without relying on rising asset prices.‍

"We are talking high single-digit to double-digit returns in a floating-rate environment with short-dated exposures."

Lockhart was also keen to dispel the notion that private credit is a single, homogeneous market. Manager selection, underwriting standards and sector exposures matter enormously.

In his view, the opportunity remains compelling, but success depends heavily on the skill and discipline of the manager.

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Where they agree

Despite advocating different approaches, the three panellists shared more common ground than might have been expected.

All agreed that the income opportunity set is significantly more attractive than it was several years ago. All highlighted the importance of valuation and starting yields. All argued that investors do not need to take excessive risk to generate meaningful income.

And all emphasised the role of active management in identifying opportunities and navigating uncertainty. The differences lie in how they seek to achieve those outcomes.

Bowe sees the greatest opportunity in high-quality fixed income and the potential for attractive returns with lower volatility. Lockhart believes private credit's ability to originate and structure transactions provides a unique edge. Haupt argues that flexibility across equities and debt offers the best chance of navigating whatever markets throw at investors next.

For income investors, the takeaway is not that one asset class is inherently superior to another. Rather, it is that the opportunity set has broadened considerably.

Whether through bonds, private credit or flexible income strategies, investors today have more options than they have had in years to generate attractive income without taking on disproportionate risk.

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Livewire Markets | 17 June 2026