Focus Sections » OTHER FOCUS SECTIONS » FIXED INCOME STRATEGIES

— ‘More inflation and higher rates could produce a reversal in growth and rates later in our secular time frame’ Scott Mather, ADAM

With the global economy perched on a tightrope, major long-term portfolio risks must be highlighted

Circus Game
I’m up on a tight-wire
One side’s ice and one is fire
It’s a circus game with you and me
– “Tight Rope” by Leon Russell

— ‘Given the current uncertainty over the direction of financial markets, many investors are looking for products capable of preserving capital, while offering the potential to deliver an attractive return over a full market cycle’ Jana Benesova-Tuma, CSAM

Products with the potential to deliver high returns while retaining a focus on capital preservation can cut the mustard during uncertain market conditions

Firm evidence of an economic recovery traditionally prompts investors to switch out of fixed income assets on expectations of generating higher returns from other products. However, while global economic growth remains strong, we believe that during this business cycle the switch will not be as pronounced.

— ‘Underpinning Danish mortgage bonds is Denmark’s extremely strong legal framework, to the extent that Moody’s has pronounced the Danish mortgage system the safest in the world’ Michael Metcalfe, Nordea

The Danish choice for achieving excess gain in a unique and rock-solid asset class

Mortgage bond funds, which can be marketed on a cross-border basis through an open-ended Sicav structure, are fast developing as a vehicle of choice to achieve premium yields.

For product manufacturers in the Scandinavian market, these yields may be in excess of comparable bond offerings from governments such as Denmark’s. Successful fund managers may use a controlled and selective process of investing in highly secure and higher yielding Danish mortgage bonds, for example.

— ‘The approach behind total return is to operate in terms of portable alpha. Thus, a manager can separate the ability to take risk in fixed income into various risk dimensions’ Robert Andrew, ABN AMRO Asset Management

Private clients are increasingly demanding an investment approach which allows their manager to separate the ability to take fixed income risk into various dimensions