After decades of historically low yields, investors are now faced with heighted rate and macro volatility. We recommend for investors to re-assess their fixed income allocations, with a focus on dynamic strategies that can take advantage of rising dispersion and enhance risk-adjusted returns.
It’s time to re-think your fixed income allocation
Key opportunity in bonds: income is back
Rick Rieder, Senior Managing Director, BlackRock’s Chief Investment Officer of Global Fixed Income and Head of the Global Allocation Investment Team, gives an update on why he thinks the greatest opportunity right now is income.
Why BlackRock for fixed income?
BlackRock offers a comprehensive fixed income platform, managing assets across the entire Fixed Income spectrum – from public to private, fundamental & systematic, active & index – to help deliver better outcomes, convenience, value, and transparency for our clients.
Global expertise
Deep knowledge in asset classes, sectors and geographic markets enable us to help find relative value across fixed income assets and uncover hidden opportunities.
Differentiated sourcing
Strong counterparty connectivity and access to deal flow across private and public markets provides our clients access to high-quality fixed income opportunities.
Technology edge
Sophisticated investment and risk management platform enhances our processes to be more efficient at scale and help clients manage portfolio risks.
Flexibility & choice
Differentiated client solutions across budgets, vehicles and investment strategies to help clients more efficiently access markets and achieve their objectives.
Fixed income investing solutions
BlackRock offers one of the largest and most diverse array of fixed income solutions, across our fundamental, systematic and credit platforms. Our Aladdin® platform, dedicated team and proprietary technology infrastructure enable bespoke client engagements and the delivery of solutions to institutions around the world.
Fundamental fixed income
BlackRock is a leader in active global fundamental fixed income. With a focus on alpha generation and risk management, the team uses top-down views from lead portfolio managers and bottoms-up expertise from our sector specialists to drive consistent alpha. The breadth and depth of our platform puts us in a strong position to deliver returns regardless of macroeconomic regime, volatility or interest rate environment.
Systematic fixed income
Systematic fixed income strategies employ unique data-driven insights backed by disciplined risk controls that seek to deliver differentiated portfolio outcomes to investors.
Enhanced
Enhanced building blocks seek to deliver consistent, high information ratio alpha by combining security selection insights with optimized portfolio construction.
Liquid alternatives
Our investment decisions use multiple, independent and risk management alpha models, seeking enhanced risk-adjusted returns with low correlations to broad asset classes.
Hedge funds
Seek to uncover alpha using relative value, directional and security selection strategies, across markets, with return profiles independent of traditional market betas.
Liability-driven investing (LDI)
Our LDI platform provides defined benefit plan sponsors with the power and flexibility of one of the most comprehensive fixed income businesses in the world, combined with proprietary asset-liability focused technology.
Investments
LDI investors require both diversifying credit investments and capital-efficient rates strategies.
Technology and innovation
LDI investors can benefit from both a direct license to our risk management technology and the ability to engage our LDI team, tools and reporting.
Custom liability expertise
As your plan’s LDI strategy evolves over time, our services keep up with your changing needs.
Index fixed income
For over 50 years, our fixed income index platform has provided clients with beta exposure across a broad range of sectors and credit qualities. Institutional clients employ index investing strategies to help achieve a variety of goals including reducing portfolio volatility, creating liquidity sleeves and reducing plan investment costs.
Fixed income index exposure is available to institutional investors through separate accounts, pooled funds and exchange-traded funds (ETFs).
Performance
Investment performance is the number one focus for our portfolio managers as measured by tracking to the client's desired market exposure.
Efficiency
By leveraging BlackRock's size and scale, we aim to deliver the best value in index investing for our clients.
Breadth of offerings
Over the last 40 years we have developed a wide array of index strategies across sectors, credit qualities and geographic regions to meet client needs.
Leader in index innovation
We partner with clients to deliver customized beta exposures and invest in technology, such as Aladdin, to continually enhance and improve our index replication process.
Fixed income ETFs
The global bond ETF industry is growing faster than expected. While it took 17 years to reach US $1 trillion, we believe the global bond ETF industry is poised to eclipse US $5 trillion by the end of 2030.
A key driver of this growth has been the adoption of fixed income ETFs by institutional investors and the introduction of active ETFs. Both passive and active fixed income ETFs are a form of investment technology and have brought transparency, access, liquidity, and efficiency to hundreds of institutions.
Managing liquidity
Whether used as a permanent liquidity sleeve or a temporary way to access markets, fixed income ETFs can bring liquidity and low trading costs.
Enhancing cash
Institutions can incrementally increase yield by stepping out of cash across a spectrum of short duration offerings and respective risk levels.
Adjusting tactical and strategic allocations
Immediate, low-cost strategic exposure to sectors where active management may be insufficient or unnecessary.
Finding an alternative to derivatives
Can be traded alongside, instead of, or relative to fixed income derivatives such as CDX, futures and swaps.
Investing in non-core assets
ETFs can provide both access and expertise to areas of the fixed income market that institutions may not specialize in (e.g. emerging debt, bank loans, CLOs, convertibles).
Sourcing additional yield
ETFs can offer the ability to enhance yield through security lending, both within the ETF portfolio, and by the institution lending out their ETF shares.
