Flexible all-round solutions are in demand

20 Nov 2018

Investors generally view bonds as a defensive investment that should serve to stabilize their portfolio with yields that are as consistent as possible. The challenge: today, it is now almost impossible to meet this expectation with traditional benchmark-oriented bond strategies, which are still commonly found in investor portfolios.

Bond yields have been at a historically low level for years. The trend towards the normalization of base rates around the world and, in particular, in the US is putting pressure on bond prices in the portfolios of traditional bond managers. Taking on greater credit risks or emerging-market risks in order to generate higher returns and secure yields is also problematic. A global slowdown in growth may be a precursor for higher default risks. More and more emerging markets are also getting into trouble as rising US interest rates are increasing the pressure on everyone with debt in US dollars.

How flexible are the bond portfolios of your investors?

In light of the challenges facing the bond markets, flexibility is in demand. Dynamic bond investment strategies do not rely on individual bond markets and are not guided by their benchmarks. With the unrestricted possibility to choose from a broad range of bond markets, they can also generate positive returns in the changing market environment faced by bond investors. Especially if they can also hold short positions. It is therefore now advisable closely examine bond portfolios.

We believe that flexible investment strategies offer attractive all-round solutions in the continuously changing market environment.

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