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Fixed Income

How Opportunistic Is Your Investment Grade Allocation?

November 2018 - 7 min read

Michael Freno, Head of Global Markets, discusses the benefits of 'multi-asset' or 'opportunistic' credit portfolios and the newly-launched Barings Global Investment Grade Strategies.

What are the main benefits to investors of ‘multi-asset’ or ‘opportunistic’ credit strategies?

Unlike traditional fixed income strategies, many of these strategies are benchmark-agnostic, meaning the portfolio manager is not required to adhere to a benchmark when constructing the portfolio. Freedom from the constraints of a benchmark gives portfolio managers considerable flexibility to pursue the best global relative value across asset classes, sectors and geographies.

Having this type of flexible mandate may provide several benefits:1) a single point of access to a broad range of investment opportunities; 2) enhanced portfolio diversification among various income asset classes that may perform differently under similar market conditions (FIGURE 1); 3) the potential for higher current income and better risk-adjusted returns versus traditional or single-sector strategies; and 4) the ability to potentially exploit price inefficiencies that may arise from short-term market disruptions.

For many investors, being able to ‘outsource’ those tactical moves, as well as more long-term strategic asset allocation decisions, into the hands of dedicated, seasoned investment professionals is a significant benefit of opportunistic multi-asset credit strategies.

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