U.S. Fixed Income
At a Glance
- Primary Benchmark: Bloomberg U.S. Aggregate Index
- Investment process applies the top-down macroeconomic investment themes of our Global Fixed Income team to U.S. fixed income markets
- We are seeking to capture interest income and total return potential across U.S. fixed income markets
- Investments typically are concentrated in sectors and individual issuers that we believe offer the best total return potential
Objectives
The objective of the Brandywine Global U.S. Fixed Income Strategy is to maximize total return while meeting our primary goal of capital preservation. The Strategy seeks to outperform the Bloomberg U.S. Aggregate Index by 1.5% (net of fees), on an average annual basis, over rolling five-year periods and only invests in investment-grade U.S. dollar-denominated fixed income securities to achieve this objective.
Investment Philosophy
We believe that with our top-down, macroeconomic-driven investment approach to seeking value and anticipating risk, we can consistently outperform the Bloomberg U.S. Aggregate Index.
Investment Process Summary
Strategic portfolio decisions, including duration, yield curve exposure, credit exposure, and sector weightings, are based upon the broad investment themes of our global macroeconomic research platform as they apply to U.S. markets. We develop an outlook for macroeconomic variables such as inflation, growth, and unemployment in the U.S. as well as in other countries that may impact U.S. fixed income sectors. The portfolio management team develops a viewpoint on the business cycle and positions the strategy's duration, sector weighting, and credit exposures accordingly.
Portfolio Construction
The Strategy invests 100% of assets in U.S. dollar-denominated, fixed income securities and cash or cash equivalents. The strategy is benchmark aware and flexible in nature but we can apply the process to any investment-grade U.S. bond benchmark with tracking error constraints based on client guidelines. Portfolio holdings are limited to our highest conviction ideas.
Duration Management
Portfolio duration typically can range from 1-10 years. When investing in fixed income securities, we have a natural bias to own medium- to longer-dated fixed-rate bonds. We have the flexibility to reduce portfolio duration should we believe duration risk poses a significant threat to capital preservation.