Global Multi-Sector Income
At a Glance
- The investment objective for the strategy is to generate attractive income and provide capital preservation
- Portfolio construction combines macroeconomic, country, and currency themes with fundamental sector and security selection analysis
- Derivatives may be used to enhance credit exposure in advantageous market conditions or, more commonly, as a hedging mechanism to protect principal during market drawdowns, manage portfolio volatility, and dampen idiosyncratic market risks
- Investments typically are concentrated in sectors and individual issuers that we believe offer the best combination of yield and total return potential while minimizing potential loss
- Portfolios normally consist of 75 to 125 corporate, sovereign, or securitized issues from domestic and foreign issuers
Global Multi-Sector Income seeks to provide attractive income in all market conditions and preservation of capital. The strategy aims to meet its objective by actively investing in income-generating opportunities across global fixed income sectors and countries that offer compelling risk-adjusted returns and meaningful diversification.
The investible universe includes a broad mix of global securities, including but not limited to: sovereign debt, emerging markets debt, global high yield credit, global investment-grade credit, structured credit, convertible securities, preferred stock, common stock, and currencies. The strategy may hold synthetic short or long positions on individual securities, indices, currencies, or interest rates.
Macroeconomic, Top-Down Focus
We incorporate top-down macroeconomic investment themes when structuring the Global Multi-Sector Income strategy. The top-down process establishes the cyclical quality bias and beta-hedging themes. Macroeconomic, country, and currency perspectives are combined and incorporated with fundamental analysis in determining sector allocation and issue selection. We aim to identify sectors and issuers that offer greater yield and total return potential with lower risk by considering a range of factors, including sector economics and risks, yield and option-adjusted spread analysis, and the probability of credit default or coercive restructuring.
We believe fundamental research is critical to constructing a portfolio that will meet its objectives. To determine a company's long-term ability to support attractive yields and total return, we analyze the quality of earnings in relation to management's goals and risk tolerance. We examine specific issuer bond covenants, position of an issue within the capital structure, and value and range of a firm's assets across the respective capital structure.
Derivatives, such as credit default swaps, interest rate futures, and options, are employed to manage risk in the portfolio. This risk management process can be used to manage volatility and preserve capital in challenging environments or to enhance credit exposure and broaden income opportunities in favorable conditions.
Buy and Sell Discipline
A security is reviewed for purchase once quantitative screens and fundamental assessments indicate the security is attractively priced while also considering the stage of the business cycle, credit quality, and sector allocation. A security is typically sold as it approaches our yield target and/or another more compelling investment opportunity arises. Alternatively, an issue may also be sold when the initial thesis supporting the investment is no longer valid.