As rates begin their steady climb, traditional fixed income approaches will struggle to deliver the results asset owners need to meet their liabilities. Many investors are now breaking out of their comfort zone and considering alternative fixed income solutions, such as multi-asset credit (MAC) strategies. Here, we discuss how MAC can help investors find opportunities in all types of markets.
Fixed income spectrum returns are nonlinear and more volatile than most people would expect. Broadening the exposure to a much wider universe of credit instruments can give portfolios more potential for outperformance.
Despite today’s defensive orientation, opportunities to capture alpha still emerge within each region and asset class. For a MAC approach to be effective, bottom-up security selection is key, which means it’s crucial for managers to have knowledge across asset classes and geographical areas.
CLOs can provide diversification and low correlation with other sectors, as well as other benefits. Portfolio manager Laila Kollmorgen, explains.