November 2020
Why Active in Fixed Income Exchange-Traded Products
Duration: 60 Minutes
Nick Cherney, CFA
Head of Exchange Traded Products
Jim Cielinski, CFA
Global Head of Fixed Income
John Kerschner, CFA
Head of US Securitised Products | Portfolio Manager
Nick Maroutsos
Head of Global Bonds | Portfolio Manager
Key Takeaways
- Government bond yields are near historic lows and real – after inflation – yields are negative. Investors need to think differently, finding opportunities to get income while controlling their risk. Consider underrepresented markets not in the usual benchmarks, such as Commercial Mortgage-Backed Securities (CMBS) and Collateralized Loan Obligations (CLOs).
- The ability to invest across global fixed income markets, gives the opportunity to find areas of the market where there may be greater opportunity from a yield and return perspective. It also enables the PMs to avoid areas of the market where they see greater downside risk.
- Moving a portion of assets from traditional intermediate bonds with a duration of around five or six years to short-term fixed income with a one- to two-year duration can potentially reduce fixed income risk without meaningfully reducing yield.