Bond markets are inefficient. We have the capability and process in place to identify and exploit these inefficiencies over the market cycle, by adopting a contrarian approach to markets with a focus on value.
Fixed Income markets are segmented as a result of various factors, including mandate restrictions across investor types and organizational rigidities. This can lead to dislocations and changes in relationships between segments. Our flexible strategy can choose from a palette of opportunities and transcend many of these artificial market barriers, both at a regional and asset class level.
The strategy’s investment process consists of four steps.
Step 1: Quarterly outlooks. We gather fundamental input, analyze major economies and place this in a cyclical context, looking at interest rate and credit spread cycles.
Step 2: Portfolio construction & optimization. We discuss and establish where we believe different fixed income segments are in a cyclical framework. This forms the foundation for our strategic fixed income asset allocation positions.
Step 3: Risk management. We manage overall portfolio risks on an ongoing basis.
Step 4: Implementation. We support our portfolio managers with our experienced portfolio engineering and trading team for the purpose of portfolio implementation, allowing them to focus on new opportunities.
The portfolio managers are responsible for the overall positioning of the strategy, including cross-asset allocation within the fixed income universe, duration management, yield curve, and country and currency positioning. The portfolio managers are part of the Global Macro team, which consists of very experienced portfolio managers, economists, strategists and macro analysts.