Actively Managed Fixed Income
Benchmark orientated approaches have served many investors well through the prolonged bull run witnessed in traditional fixed income investing over the last 30 year cycle of declining interest rates.
However, we feel that these passive portfolios are often naturally biased towards the more indebted issuers, which is not always desirable from an industry or credit perspective. The increased popularity of the exchange traded fund (“ETF”) market has further contributed to a decline in yields of already highly leveraged companies (particularly in the less liquid high yield space). While the tightening of bank regulations, alongside a general shortage of fixed income supply, has lowered overall levels of liquidity within fixed income markets.
With developed market interest rates and credit spreads at multi-year lows, passive fixed income portfolios are becoming increasingly exposed to interest rate risk. Yet the compensation investors receive for this risk, through coupon payments, has never been lower.
At Rubrics Asset Management we believe that the solution lies in actively managed strategies that are:
- Biased towards the most liquid markets and issuers globally
- Diversified across a wide spectrum of fixed income assets
- Exposed to multiple fixed income strategies to capture a variety of risk profiles and return generators
- Designed to provide a consistent risk budget with varying risk exposures across the cycle