Global fixed income

The Global Fixed Income strategy offers diversified exposure to fixed-income securities across various markets, geographies, and credit qualities. It aims to balance risk and return while providing a steady income stream. This strategy encompasses multiple sub-strategies, each targeting distinct sectors of the fixed-income universe.

Sub-Strategies

1. Money Market

• Objective: Capital preservation and liquidity with minimal risk.
• Instruments: Short-term debt securities such as Treasury bills, commercial paper, and certificates of deposit.
• Investment Horizon: Typically less than one year.
• Key Characteristics:
  • High credit quality and low duration.
  • Offers a safe haven during market volatility.
  • Provides steady, albeit low, returns compared to longer-duration bonds.

2. Government Bonds

• Objective: Stability and consistent income with low default risk.
• Instruments: Sovereign debt issued by stable governments, including U.S. Treasuries, UK Gilts, and German Bunds.
• Investment Horizon: Short-, medium-, and long-term maturities.
• Key Characteristics:
  • Low credit risk, backed by government guarantees.
  • Widely used for portfolio diversification and as a risk-free benchmark.
  • Sensitive to interest rate changes, particularly for longer maturities.

3. Corporate Bonds

• Objective: Enhance yield by lending to corporations with varying credit qualities.
• Instruments: Bonds issued by investment-grade corporations.
• Investment Horizon: Medium- to long-term.
• Key Characteristics:
  • Higher yields than government bonds, reflecting additional credit risk.
  • Performance influenced by corporate financial health and economic conditions.
  • Offers opportunities in diverse sectors and industries.

4. High-Yield Bonds

• Objective: Maximize income through higher-risk debt instruments.
• Instruments: Bonds issued by companies with below investment-grade ratings.
• Investment Horizon: Medium-term focus, often paired with active management to mitigate risks.
• Key Characteristics:
  • Higher yields compensate for greater credit risk.
  • More volatile, sensitive to economic cycles and default rates.
  • Attractive in periods of economic growth and low default environments.

5. Emerging Markets Bonds

• Objective: Capitalize on higher yields and growth potential in developing economies.
• Instruments: Sovereign and corporate bonds from emerging markets (e.g., Latin America, Asia, and Africa).
• Investment Horizon: Medium- to long-term.
• Key Characteristics:
  • Higher yields than developed markets due to perceived risk.
  • Subject to currency fluctuations, political instability, and economic volatility.
  • Diversification potential with access to fast-growing economies.

6. Convertible Bonds

• Objective: Benefit from bond-like stability and equity market upside.
• Instruments: Bonds with embedded options allowing conversion into equity.
• Investment Horizon: Long-term, depending on equity market trends.
• Key Characteristics:
  • Combines fixed-income characteristics with equity participation.
  • Lower yields than standard bonds, offset by conversion potential.
  • Appeals to investors seeking growth with downside protection.

7. Subordinated Bonds

• Objective: Earn higher yields by investing in lower-ranking debt instruments.
• Instruments: Subordinated debt (e.g., junior bonds, hybrid securities).
• Investment Horizon: Medium- to long-term.
• Key Characteristics:
  • Lower priority in repayment hierarchy than senior bonds.
  • Higher yields due to increased risk.
  • Often issued by financial institutions as part of capital structure management.

Core Features of the Global Fixed Income Strategy

1. Diversification: Reduces risk through exposure to various fixed-income categories and geographies.
2. Steady Income: Provides regular interest payments, appealing to income-focused investors.
3. Risk Management: Balances risk through allocations across credit qualities, sectors, and maturities.
4. Market Responsiveness: Adjusts for interest rate changes, inflation trends, and credit conditions.
5. Portfolio Role: Acts as a stabilizer in multi-asset portfolios, reducing volatility and providing predictable returns.