Global Aggregate Bond
At a Glance
- The investment objective for the strategy is to provide capital preservation and growth in an index relative framework
- Portfolio construction combines macroeconomic, country, and currency themes with fundamental sector and security selection analysis, with benchmark consideration
- 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
- 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
- Portfolios normally consist of 100 to 250 corporate, sovereign, or securitized issuers
Objective
Global Aggregate Bond is a flexible, value-oriented strategy that aims to preserve and grow capital with an emphasis on strong, risk-adjusted total return by dynamically allocating across the global fixed income market. The strategy aims for capital appreciation over the course of a full market cycle.
Universe
The investible universe leverages instruments within the global aggregate indices; including a broad mix of global securities, primarily fixed income assets, not limited to: sovereign debt, emerging markets debt, global high yield or investment-grade credit, structured credit, convertible securities, and currencies. Derivatives are employed to enhance credit risk or limit market risk in challenging market environments.
Investment Process
The strategy applies a differentiated and proven process that combines analysis of macroeconomic conditions with bottom-up fundamental research to identify global value anomalies and cross-sector opportunities that we believe offer the most compelling combinations of valuations and durable fundamentals.
Top Down Macroeconomic Analysis with Bottom-up Fundamental Research
We incorporate macroeconomic themes when structuring the Global Aggregate Bond strategy. The top-down process establishes the cyclical quality bias and the 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. Fundamental research is grounded in evaluation of business model (and cash flows), specific issuer bond covenants, recovery rate, and position in the capital structure.
Dynamic Rotation Provides Diversified Sources of Alpha and Downside Protection
The strategy’s dual approach provides the global perspective to respond to multiple global business cycles, rotate the portfolio to the economic environment, and proactively manage interest rate and credit risks. Sector rotation, idiosyncratic security selection and duration management are actively applied across the global fixed income universe to generate diversified sources of alpha and attractive upside potential.
The dynamic rotation responds actively to the macro environment, using safe-haven duration, derivatives, and other tools to minimize downside volatility. Non-base currency exposures are limited to help reduce overall volatility.