Tailoring an investment approach to current conditions
Does today's late-cycle, low rate environment merit an unconstrained approach to fixed income portfolios? To help answer that question, eVestment looks at data such as asset class exposures and credit quality within 200 unconstrained bond funds.
The papers below examine the pros and cons of several strategic approaches to fixed income allocations, including infrastructure debt, convertibles, and bond ETFs. A few investment outlooks for the broader fixed income market are also provided.
STRATEGIC FIXED INCOME ALLOCATIONS
In this paper, eVestment examines data from 96 asset management firms on over 200 Global Unconstrained Bond strategies, amounting to almost USD 450 billion in AUM.
For compliance reasons, this paper is only accessible in the United States and Canada
The authors argue that floating-rate loans deserve consideration as a strategic allocation because they can offer attractive yields, protection against interest-rate risk, mitigation of credit risk, and a hedge against rising rates.
How can investors capture the value effect in fixed income markets, or is it even possible to do so? FTSE Russell uses OAS to define value, and then applies their model to US and global bond markets.
This 40-page paper focuses on implementation challenges in factor-related credit solutions, also providing 5 case studies on the same topic.
What are the potential benefits of infrastructure debt for pension funds and insurance investors?
For compliance reasons, this paper is only accessible in the EMEA region
Convertible securities offer to investors a combination of the income they would receive from bonds and the growth potential of common stocks. In this paper, Franklin Templeton makes the case for global convertibles.
For compliance reasons, this paper is only accessible in the United States
A lower liquidity environment may benefit bond ETFs, which allow for low-cost exposures to areas of the bond market that are difficult to access over the counter, as well as providing other advantages versus traditional bonds.
FIXED INCOME OUTLOOKS
What are the risks that are currently facing global high yield markets in this mature market cycle? Barings discusses covenant-light loans, rising rates, global trade wars, and other issues.
For compliance reasons, this paper is only accessible in certain geographies
In the latest 360° Fixed Income Report, Hermes fixed income teams provide their quarterly assessments of risks and opportunities across the credit spectrum.
Amundi AM presents a comprehensive overview of ECB QE, including analysis of bonds purchased by country and maturity as well as yields on sovereign debt.
This playbook/chartbook surveys the current state of income-producing asset classes, including IG credit, HY, EMD, Munis, and Dividend-paying equities, culminating with cross-asset comparisons.
For compliance reasons, this paper is NOT accessible in the United States and Canada
Eaton Vance's Multi-Asset Credit Team produced this report detailing global economic data and the outlook for fixed income sub-asset classes.
This Robeco paper reviews monetary policy across global central banks, including the US Fed, the ECB, the PBoC, and the BoJ. It also discusses sovereign bond yields and inflation indicators.
LIQUIDITY AND CORRELATION
In times of market stress, illiquid securities fare worse than their more liquid counterparts. This begs investors to call into question whether they are being adequately compensated for liquidity risk in their portfolios.
The stock-bond correlation could matter less than investors think - further analysis reveals that it says little about the relative performance bonds and stocks.