Diversifying the core

Jul 10, 2017

Unconstrained fixed income in an uncertain world

Are unconstrained fixed income strategies relevant in today’s climate where interest rates are starting to edge up? If so, what role could they play?

  • As rates move higher, we believe that flexibility in fixed income is more important than ever. Investors with core bond portfolios benchmarked to global aggregate bond indices face a challenging combination of high duration and low yield.
  • Recent policy uncertainty has underlined the importance of avoiding concentrated bets and seeking out diverse sources of alpha.
  • Unconstrained strategies give managers the potential to move duration exposures up or down and to access the broadest set of return drivers from across the global fixed income universe. 

Paid less to assume more risk
Yield and duration for Bloomberg Barclays Global Aggregate Bond Index

Paid less to assume more risk

Source: Barclays Live as of 31 May 2017. Past performance is not a guide to current or future performance and should not be the sole factor of consideration when selecting a product. One cannot invest in an index.

Scott Thiel
Deputy Chief Investment Officer of Global Fundamental Fixed Income and Head of Global Bonds