With its active, flexible, multisector approach to investing in fixed income, it is possible to improve your income returns. We can pivot across sectors, manage risk dynamically and offer a measure of downside protection.
Outperformance versus the benchmark and category peers requires more than simply reaching for yield. Long-term success comes from combining high, sustainable income with price appreciation, sourced through active security selection and sector rotation.
This requires using a combination of investment techniques over a market cycle.
The flexibility to hedge directly against both credit risk and interest rate risk when the market is seemingly not compensating you enough to take them is important for positive returns.
Forgoing modest levels of spread or yield pickup in the short term to protect the portfolio from greater risks that can play out over mid- and long-term cycles.
Right now, we see an asymmetric balance of risks, with limited upside from further credit tightening and significant downside from a growth or credit shock. This makes for a flexible.
During the first quarter of 2026, both the high-quality, rate-sensitive Bloomberg U.S. Aggregate Bond Index and the less rate sensitive, below-investment-grade Bloomberg U.S. High Yield Corporate Index experienced negative returns.
The portfolio’s duration (a measure of interest rate sensitivity) can largely insulate the portfolio from the rate backup caused by a supply-driven oil price shock.
The active use of credit default swaps — standardized credit derivatives on investment-grade and high-yield corporate indices — Rigorous security selection serves as a form of defense.
With possible allocations spanning the fixed income universe, portfolio managers have room to rotate toward the best relative value within a global opportunity set.
Rigorous security selection serves as a form of defense. By identifying deteriorating credits before the broader market recognizes the stress, managers seek to avoid permanent capital impairment — the most damaging outcome in fixed income investing.
To learn more about the Income Investing, or to explore how we can complement your current fixed income portfolio, contact me.
