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Strategic Approaches to Fixed Income Portfolios

  • Posted by: ,  Chief Executive
  • 23 November 2018
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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.   
 

tailored approach


STRATEGIC FIXED INCOME ALLOCATIONS


Global Unconstrained Fixed Income Report (eVestment)

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.

The case for floating-rate loans as a strategic allocation (Eaton Vance, 2018)

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.

FTSE Fixed Income Factor Research Series – The Value Effect (FTSE Russell, 2018)

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.

Factor investing in corporate bonds - client cases (Robeco, 2018)

This 40-page paper focuses on implementation challenges in factor-related credit solutions, also providing 5 case studies on the same topic.

Infrastructure debt in a portfolio context: A first exploration (Aegon AM, 2018)

What are the potential benefits of infrastructure debt for pension funds and insurance investors?

The Case for Global Convertibles (Franklin Templeton, Oct 2018)

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.

iShares’ Institutional Guide to Bond ETFs (BlackRock, Nov 2018)

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


Podcast: Climbing High Yield's Wall of Worry (Barings, Oct 2018)

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.

360° - Fixed Income Report, Q4 2018 (Hermes IM)

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.

ECB QE Monitor (Amundi AM, Nov 2018)

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.

Income Strategy Playbook 4Q 2018 (OppenheimerFunds)

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.

Eaton Vance Credit Markets Chart Book, Q3 2018

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.

Central Bank Watcher (Robeco, Oct/Nov 2018)

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


Is your liquidity just a mirage? (Macquarie, Oct 2018)

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.

Does the Stock‑Bond Correlation Really Matter? (PIMCO, 2018)

The stock-bond correlation could matter less than investors think - further analysis reveals that it says little about the relative performance bonds and stocks.

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