Fixed income investments have historically played an important role in any investor’s portfolio because the asset class has been counted on to protect capital, reduce volatility, and generate consistent cash flow.
This is particularly true for those who depend on their portfolios for income during their retirement. However, interest rates have declined over decades while government debt has soared, bringing into question whether fixed income will ever again be able to deliver the stability and income investors have counted on.
More than ever before, a well-managed fixed income strategy needs to be tactical and efficient to lower risk, provide stability, and produce a return greater than inflation.
The objective of our strategy is to provide diversification and improved yield by tactically investing across a variety of bond categories with varied credit exposures and maturities. To do this efficiently, we use a combination of exchange traded funds (ETFs) and credit strategies targeting alternative yield. Simply holding individual bonds until maturity, that can’t be easily sold in the ‘opaque’ world of bond markets, is no longer effective and can result in significant price erosion.
The core component of our fixed income strategy (75-90%) uses bond ETFs, which provide:
Direct access to a broader range of markets
Increased price transparency
Ease of trading
We add an overlay component within our fixed income strategy (10-25%) by making use of different multi-asset credit strategies.
These strategies target inefficiencies in the credit markets, and discrepancies in the pricing of bonds between sectors and countries, with the objective of producing positive returns in rising or falling interest rate environments.
A multi-asset credit strategy may improve risk and return in a fixed income strategy by:
Increasing income generation
Protection against rising rates
More complete and dynamic asset allocation
Take advantage of credit dislocations
Greater customization within fixed income
Today’s environment requires flexibility, more awareness, and a sophisticated approach to investing in bonds and other fixed income investments. You can no longer simply buy a bond, wait until maturity, and expect a positive return.
Would you like to learn more? Contact us today.
"TURN8 has a well executed strategy, is very responsive, and flexible to client needs and requests."