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Unconstrained and Absolute Return Fixed Income Investing

  • ,  Chief Executive |
  • 03 Jul 2018
  • Updated 02 Jul 2018

The top 10 white papers from asset managers and consultants

In an environment of rising interest rates, it is no surprise that many fixed income investors are considering unconstrained strategies, potentially freed from the shackles of benchmarks and bond ratings and possibly free to use derivatives to hedge risk and capture alpha. With most asset classes highly valued, there is added appeal in using an unconstrained approach to minimise downside risk. 

The papers below examine a variety of approaches and nuances around unconstrained fixed income investing. Russell Investments examines frameworks with the potential to generate returns above the risk-free rate, while building in downside protection.

hot air balloon unconstrained fixed income investing

Unleashing potential within unconstrained bonds (Russell Investments, Jun 2018)
(For compliance reasons, this paper is only accessible in certain geographies)
This Russell Investments paper outlines the benefits of some of the more alternative and nuanced diversifiers available to investors using unconstrained investment strategies.

Simplifying Unconstrained Fixed Income Investing (Aon Hewitt, 2014)
This paper identifies and explains three key types of unconstrained fixed income strategies that are prevalent in the marketplace: Absolute Return Bond, Total Return Bond, and Multi-Asset Credit strategies.

Webinar: Absolute return fixed income – a dynamic approach (Manulife AM, 2018)
Absolute Return fixed income can act as a useful diversifier within growth fixed income portfolios. This paper introduces the strategy and its investment rationale.

The Landscape of Benchmark-Agnostic Fixed Income Strategies (Mercer, 2018)
Over the last decade the number and types of fixed income investment strategies have increased significantly. This proliferation has been mainly focused on strategies that are “benchmark-agnostic” and therefore unconstrained in nature.

Science and Art: A Framework to Unlock Multi-Asset Opportunities (AB, 2017)
(For compliance reasons, this paper is only accessible in the Americas and the Carribbean)
Strategic allocation poses big challenges today. But simply combining off-the-shelf strategies can create unwanted risk/return exposures and make it harder to manage drawdowns. Strategists at AllianceBernstein explain further.

Navigating Success Within the Unconstrained Bond & Multi-Sector Credit Fund Universe (Sheffield Haworth, 2016)
A brief overview of the landscape for unconstrained bond or multi-sector bond funds and the challenges facing asset owners and investment consultants in the selection of capable portfolio managers.

Defining absolute return investing in fixed income (JP Morgan AM, 2015)
Investors, although familiar with equity absolute return strategies, are not often enough aware or familiar with fixed income absolute return strategies. This paper gives more insights into the strategy.

Index Your Bonds - A Guide to Dispelling the Myths (BlackRock, May 2018)
(For compliance reasons, this paper is only accessible in the United States)
Finally, in order to provide some balance, BlackRock presents the arguments for indexations of a bond market portfolio, in the process dispelling seven common myths about bond indexing and ETFs.